Bond Yields Just Hit a 2007 High... Every Buyer Became a Seller

0:00This is a major bear market in bonds, and that bear market has a long way to run. We don't have any major lenders anymore. Everybody that was buying treasuries is now selling them, and we've got more treasuries to sell than ever before. The Fed is gonna end up buying all the treasuries that nobody else wants, and the only way they can do that is to create inflation. The traders still haven't figured that out. They're going to figure it out. The Peter Schiff show. Well, it's been a long summer, but I'm finally back home here in Puerto Rico in time for the Labor Day weekend. I guess the best way to start the Labor Day weekend podcast is to go over the jobs report that came out earlier this morning, the August non-farm payroll numbers. We're out, and if you've heard any of the news stories today, it's a huge beat.

1:00We've got the strong labor market. It's triple expectations. It's a four sigma beat. They're saying four times higher than the standard deviation of what was expected. Now, one way to get a big beat is to have a really low bar to hurdle. And that was the case, because there wasn't a lot of jobs that were expected for the month of August. The expectation that consensus average was 55,000 jobs. So not a high hurdle. In fact, the range of estimates went from 12,000 on the low side to 100,000 on the high side. And remember, last month, we actually got a negative non-farm payroll report down 23,000. So they were expecting a rebound, but not that much of a rebound. Now, again, as I've been saying, none of these numbers even matter. Who cares what the number is? Because it's meaningless because it's always revised.

2:03And it's almost always revised down. Every once in a while, the revisions are up, but even those could be dowerly revised. You have no idea. They can go back a year later and revise months and months of employment numbers, which is what they've been doing for years. Yet for some reason, the market reacts to these numbers like Moses just brought them down on tablets on Mount Sinai. But anyway, so we got 162,000 jobs. I was watching it on CNBC. Rick Santelli was going crazy. He was like, oh my God, look at this huge number. This massive beat. I remember when 162,000 jobs would have been a disappointing month. I mean, that's not a lot of jobs. For an economy the size of the United States to create, right? So we really lowered expectations here. They also revised up the last two months, especially last month.

3:03So last month went from minus 23,000 to plus 21,000. Again, who knows where it's going to end up at the end? This is the first revision. They could revise it again. And I believe the 162,000 number is also going to be revised down. I don't think there's any way that this is going to hold up. In fact, there's probably at least a 50, 50 chance that by the time we get the final number, it's lower than the 55,000 that people expected. So in other words, it's not really a beat. It's a miss. But you know, Mark Stonecare, obviously Trump administration is bragging about these numbers. I'll get to that in a minute, but let me just go over a little bit more. So unemployment rate held steady at 4.1%. Private payrolls rose 127,000 versus 53,000 expectation.

4:04And again, a big revision upward from last month's 30,000 to 71,000. Manufacturing actually had a decent month, I guess, if the number is real, up 16,000 jobs. That's the most manufacturing jobs I've seen in a while. And in fact, last month's 5,000 was revised up to 14,000. So we are creating a few manufacturing jobs. And the labor force participation rate notched up to 61.6 from 61.4. Now a lot of people came back into the labor force, but for some reason that didn't increase the unemployment rate, not really sure how that happens. Although the labor force participation rate was moving up from the lowest it's spent in on decades, maybe more, more 50 years, 60 years. It was a really low number. But if these people came back into the market and in fact, according to the household survey, I forget the numbers, but there were a hundreds and hundreds of thousands of full-time jobs created.

5:04Finally, normally full-time jobs are lost, but according to the household survey, in August, there were hundreds of thousands of full-time jobs gained. But for some reason, the unemployment rate did not move up from 4.1%. The rest of the report averaged hourly earnings in line up 0.3, better than the 0.1 from the prior month and average hourly earnings of 3.1 on the year, down from 3.2. Now I believe prices certainly in real terms are up a lot more than 3.1% year over year. So real wages adjusted for actual inflation are substantially down on the year, which is why people are so upset about the economy and the average work week notched up about 10 minutes from 34.3 hours to 34.4 hours. But of course, if you look at the quality of the jobs, not just the number of jobs, better than a third of the jobs were created in food and beverage services.

6:09So you're talking mostly waiters, bartenders, maybe some cooks and people that do the dishes or mop up the restaurants. I mean, these are not quality jobs. These are low-paying jobs. In fact, a lot of them are probably part-time jobs. And that was the biggest category of job creation. And it was much bigger in that category than in a typical month. You know, I wonder how many of these waiters and bartenders that landed these jobs also have college degrees and how much they owe on their student loans because this is going to take a long time to pay them off, you know, working as a bar back. Then if you add to that, the government jobs in education. So probably mostly teachers or maybe some admin people that work in public schools. And then you add healthcare workers. Now you're at 70% of the jobs. These are not the jobs that we need.

7:11If we want to reduce our trade deficits, we need productive jobs. We can't export a lot of these jobs. We can't export waiter and bartenders. You know, you got to come to America that we can't export this stuff to the rest of the world. So these jobs are not going to reduce our trade deficits. They're going to add to our trade deficits because the teachers and the bartenders have to buy stuff. And a lot of the stuff that they buy is going to end up being imported. Now the other thing about the numbers that came out today is that they really fly in the face of other jobs numbers that we got during the week, which is another reason that I'm pretty sure we're going to be looking at downward revisions other than the fact that that's the trend. But the Joltz numbers, Joltz report, which is the job openings, the job openings for July came out below the consensus estimate. It was for 7.358 million.

8:13And that dropped to 7.271 million and then they revised down the prior month, which was reported at 7.359 million, which I think was also less than they expected. And that was revised down to 7.182 million. So there are fewer jobs open employers are looking for fewer workers. So that would indicate a weaker job market. If you look at the ADP private job report that came out two days earlier, this was a miss. The expectation was for 48,000 jobs and only 38,000 were created. According to the government, a lot more private sector jobs than 38,000 were created. So who was right? Is ADP right? Is the government right? They're probably both wrong. But I'm sure the government is even more wrong than ADP. In fact, the birth death model, which I've talked about on the podcast before, added 74,000

9:16jobs to the 162,000. So that's 45% of the jobs. They don't even know if they were actually created. They just assumed they were created. And in fact, it's just as likely, if not more so, that we didn't have any jobs that were born, right? These are companies that were born. And then they hired people. It's more likely that some companies died off, that more companies went out of business than went into business. So it's possible that we didn't gain jobs that were born. We lost jobs that died off. But, you know, and that's where a lot of the adjustments end up coming from. A year later, is they revised a birth death model. So those 74,000 jobs, 45% of the number are automatically suspect. And since it's almost always downwardly revised, what happens is the government statisticians, they're always optimistic. They think the economy is strong.

10:17And so they assume that new businesses are forming and that they're hiring people because they're overly optimistic. I mean, nobody is more overly optimistic than Kevin Haslet, although maybe Donald Trump, but I was listening to Kevin Haslet talking about this great jobs report, this phenomenally strong report that's, you know, 162,000 jobs. But he attributed all of these jobs to the economic boom that we're currently experiencing. Now, every time I hear this guy talk, it's a booming economy. We have the Trump boom, the booming economy. What is he talking about? I mean, what numbers suggest that we're in the middle of an economic boom? Do you think that Donald Trump's popularity, even on the economy, would be at an all-time record low if we were enjoying an economic boom? I mean, it's more like a bust than a boom, but in fact, objectively, if you just take

11:19the government's own numbers and you compare where we are now, I mean, GDP, the trade numbers, the jobs numbers, you know, all the personal income, all these numbers that we get all of the time. And you just compare them where they are now to where they were at the end of the Biden term. So where everything was when the baton was passed to Trump, by most of those measures, the economy is weaker now than it was then. So how can the economy have been the worst economy in history, according to Trump, when Biden was president? Was the worst economy in history? And today, when most measures are lower than they were, then it is an economic boom. It's the greatest economy in history. Obviously, both of those can't be true. In fact, neither of them are true. Every investor understands counterparty risk. When you deposit money in a bank, it's not really your money anymore.

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13:24Stop trusting a claim. Own the vault. That's proton.me slash Peter. But anyway, Trump also talked about these job numbers and posted about them on truth social. But what Trump posted was even more ridiculous than what Hassan said. Trump of course immediately bragged about the strong numbers and it took credit for them. But then he basically issued an ultimatum to the Federal Reserve. Basically trying to extort them or blackmail them. He said that the United States deserves to have the lowest interest rates in the world, just like we had in the old days. The good old days when we had low interest rates. And that was true. At one point we had very low interest rates relative to the rest of the world. And Trump wants to go back to those good old days.

14:27The problem is we can't go back to the interest rates of the good old days without going back to a lot of other things that we had in the good old days that we don't have now. Because back in those days a lot was different. We were the world's biggest creditor nation or a creditor nation. Now we're the biggest debtor nation. We didn't have a $40 trillion national debt. We had a tiny national debt. We had balanced budgets. We had a very small federal government. We had a high personal savings rate. And we were on a gold standard. If you're really going back to the good old days and in fact the real good old days, not only were we on a gold standard, we didn't even have an income tax. We didn't even have a payroll tax. And we had very low interest rates relative to the rest of the world. And Trump keeps talking about how we are a great credit risk. No we're not. In fact, even standard and poor as in Moody's have downgraded our credit, but they haven't

15:31downgraded it enough. We were a much better credit risk back then 50 years ago, 100 years ago. We were a much better credit risk. We have a lot more debt when you have $40 trillion in debt. When you're running these massive budget deficits, you are a worse credit risk than when you have balanced budgets. And when you don't have a lot of debt, look, any individual, if you go and apply for a loan and they look at, you know, your numbers, they want to know what your income is, how much debt you have, they're more likely to lend you money if you don't have a lot of debt. If you're maxed out on all your credit cards, you're going to get turned down the less debt you have, the better the credit risk you are. When you have a lot of debt, you're a risky, a borrower. Now you can argue that well, the US isn't going to default. Okay, but the risk is that we're going to inflate because when we don't have the ability

16:36to repay our debts legitimately through taxation because the debts are just too big in relation to our tax base and our revenue, then we're going to resort to the printing press. The US is far more likely to repay its debts in inflated dollars now than it was 50 years ago, 100 years ago. So we are a worse credit risk. In fact, you can argue that we've never been a worse credit risk than we are right now. So what the hell is he talking about? You know, we're such a great credit risk. And you know, he always brings up Switzerland to say, look, you know, look at Switzerland, they're, you know, their rates are so low. Precisely because they are a good credit risk. That's why they don't have these big deficits. And I'm going to get into that in a bit. But the next thing that Trump said after he finished talking about how we deserve these low interest rates, then he said, if the Federer Reserve doesn't cut interest rates, I am going

17:41to terminate all trade in the United States with any country that has a trade surplus with the United States. I'm going to shut it down to zero. I'm going to ban the trade. And he thought this was a great idea. And he said, you know, the Supreme Court is okay with it. They said, I have the power to do this. Now, I disagree. I don't think he really has the constitutional authority to ban trade with, you know, half of the world. There may be the authority in certain circumstances to ban trades with certain countries, maybe for national security reasons or something, but they have a blanket ban by saying Americans can't trade. American citizens are not free to buy and sell with Canadians, you know, or with Europeans or with China. I mean, just because. The president doesn't have the authority that he imagines that he has, but, you know,

18:41he thinks he does. And he thinks that that's even better than a tariff. He said that banning trade is better than tariffs. Why? If you ban trade, the government gets zero revenue. At least when there's a tariff, the government collects some revenue. But when you just ban trade, you don't get any revenue at all. So there's no positive for the government, but the economy would collapse. That's, you know, something that Trump doesn't seem to understand. And in fact, as ridiculous as that statement was, I mean, first of all, how do you even threaten the Fed to reserve? Say, if you don't lower interest rates, I'm going to send the US economy into a collapse because I'm going to ban trade. I mean, what does that have to do with the Fed's decision on interest rates? I mean, you're basically saying, look, if you don't do this, right, I'm going to do this really bad thing because obviously it must be a bad thing if it's a threat.

19:41If he's saying I'm going to do this unless you do something that you don't want to do, that doesn't work if what you're promising to do is good. It's only if you're promising to do something bad. So he must know, despite what he tells the public, he must know that the Fed are reserved with it. Oh my God. Trump's going to destroy the economy. Unless we do this, well, first of all, they know he's bluffing. They know it's taco. I mean, he couldn't follow through with his threats against Iran to blow up Iran. Why the hell is he going to blow up the United States because actually doing this would be like blowing up the US economy. He's not going to do it, but he doubled down on this because I was watching in a, I guess reporters were asking him questions later in the day and somebody asked him specifically about this and he said, yeah, he said it's a great, it's a great idea. He said it's a great way to solve our trade deficit problem. It's just not to trade with anybody and then we won't have a deficit.

20:43So problem solved. No, the problem isn't solved because then we don't have any products. We haven't even bigger problem. The irony, of course, is if the president actually carried through with this empty threat, which he's not going to do, but let's say he said, okay, we're not going to trade with any countries that have a trade surplus with us. And let's say you knock out half the countries. Of course, all the big countries, right? We have surpluses with some smaller countries, but all the big countries pretty much we have a deficit. What would happen? Well, the countries with which we have a surplus, they would turn into a deficit. Why? Because now we would have to buy more from those countries because we couldn't buy from the other countries. So we'd have to buy more of their products. They may not be as good a deal, but it's better than nothing. So we would start buying more from those countries. Meanwhile, those countries might buy even less from us because they would start buying more from our trading partners. Like, if we couldn't trade with China anymore, we think China is just going to dump all

21:45those goods into the Pacific Ocean. I mean, yeah, obviously domestic consumers are going to get the benefit of some, but they're going to export some of those goods, maybe not at as good a price as we were paying, but you know, they'll still export them. So people in countries are now going to buy more Chinese goods. So they have less money to buy US goods. So eventually, we'd have to cut off trade with the entire world. What would happen in America if we couldn't trade? I mean, the economy would implode. First of all, prices would go through the roof. If Trump's goal is to have lower interest rates and he knows that the Fed is looking at consumer prices, what would happen to consumer prices if there were no more consumer goods? I mean, we have a trade deficit in goods of over a trillion dollars a year. You take those goods out of the economy. What the hell are the goods going to cost? The prices are going to skyrocket. So the Fed is going to really have to jack up rates if Trump follows through with this

22:46threat. And of course, what's going to happen to employment? Employment is going to collapse because if there's nothing to buy, right? If the shelves are empty at Walmart, does Walmart need all these workers? Customers are coming into their stores because there's nothing to buy because Trump kept it all out. Everything would collapse. He doesn't even know this that Republicans were correct to criticize buy. Biden for the decline in his mental acumen. It was clear that he wasn't all there and a lot of the things that he was saying. Well the same is true of Trump. I mean, Trump, he's not playing 40 chess here. I mean, he's not even playing with a full deck. He's always talking about who's got the cards. He's got cards missing because these statements are ass and nine. There's no way that he could believe this or mean, if he does believe this, it's even worse. But how does he put this stuff out on truth social?

23:48I mean, you can say, well, he's just a complete economic ignoramus. I mean, he can't be that ignorant on basic economics. So I mean, he's got a few screws loose there. I mean, he's losing it mentally to say this stuff. Yet the Republican Party refuses to challenge him. In fact, I was watching an interview with Scott Besett. Larry Cudlow was interviewing Scott Besett. And during the course of the interview, Cudlow said, you know, Donald Trump does have a tendency to occasionally exaggerate stuff a little bit. Now that would qualify as one of the biggest understatements of the year because he doesn't just exaggerate a little bit. He exaggerates a lot. In fact, that's a nice way of saying he lies and he doesn't do it a little bit and he doesn't do it occasionally. He pretty much does it every time he speaks.

24:49And the minute he said that, Besen got so defensive. He said, oh, Larry, whoa, whoa, those are your words, your words Larry, not mine. Like he was so afraid that if he didn't push back against that, that somehow he would get in trouble with Trump. So he had to make sure to distance himself from even acknowledging that he's slightly exaggerate stuff once in a while. I mean, come on, I mean, talk about he's not the secretary of the treasury. He's the secretary of ass kissing. And he is afraid. Everybody in that administration must be walking out of eggshells. They're afraid to say anything negative about about Donald Trump. There's a lot I should be doing for my health, but hydration is one of the few things that makes an instant difference. When I'm staying on top of it, I feel better. I have more energy and I'm just more ready for the day. Drip drop has made it easier to stay hydrated because it tastes great, works fast, and I can bring it with me wherever I go.

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26:53To make it easy, drip drop has flexible subscription options. So you're never stuck without proven fast hydration. Right now drip drop is offering podcast listeners 20% off your first order. Go to drip drop.com and use promo code gold. That's drip drop.com promo code gold for 20% off. Of course, after we got the news on the the jobs numbers, the markets immediately reacted. Again, as if these numbers meant anything. The biggest reaction was probably in the gold market because gold plunged about $90. It was relatively flat before the numbers came out and it dropped $90. Now it recovered most of those losses on the day, but it was still down on the day. Bonds sold off, not substantially. And they did not take out the lows. In fact, a big story this week was the bond market hitting new lows and yields hitting

27:57new highs. In fact, the yield on a 10 year US treasury earlier in the week got above 4.81%. That's a new high going back to 2007. The 30 year yield almost hit 5.3 got up to 5.28. I think was the highest I saw. That was a new high going back to 2007 as well. On the week yields closed off those highs, but still positive on the week. So this is a major bear market in bonds and that bear market has a long way to run. Dollar index also fell on the week, not much, but about a half a percent. Looks like it closed about 99.66. The big mover on the week was the Japanese yen, which yesterday spiked a couple of percent. So the yen is down to or up to, but it's the numbers coming down, but it means a stronger yen at 15620.

28:59So it's back below 160, which is really the line where everybody was panicking. But you know, Japan for decades and decades, they pursued a policy that was designed to weaken the yen. It was a misguided policy, but they wanted to weaken the yen. They thought the problem was a strong yen and that wasn't a problem. That was actually a good thing, but they believed it was a problem because it was problematic for some Japanese exporters who wanted to sell products to Americans. The dollar was weakening, then fewer Americans could afford Japanese products and they should have allowed that to happen and they should have found customers who could afford the products. But rather than doing that for political reasons, they subsidized the US by propping up the dollar, by buying a bunch of treasuries, weakening the yen. And then of course, that allowed America to go deeper into debt because we had Japan as a major buyer of treasuries.

29:59And I think a few years ago, their holdings topped out at more than 1.3 trillion in US treasuries. Now it's down to about 1.1 trillion because now they have a real problem. Now they don't have a fake problem of a too strong yen. They have the very real problem of a weekend. And if the way they tried to contain the yen, slow down the rise was by buying treasuries, what they have to do now to prop up the yen is to sell treasuries. And they're going to be selling treasuries for years and years and years. And this is a big problem for us because we don't have any major lenders anymore. The China is going to be selling. I think Russia has not blown any money anymore. Europe has got their own debt problems. They're not loaning us money. In fact, you can see more of these sovereign wealth funds selling treasuries and buying up actually more European debt.

31:01We used to have our own trust funds. We're the big creditors. Social security trust fund, Medicare trust fund, they were buying US treasuries. They're now selling US treasuries. They need money now. They're running at deficits. So everybody that was buying treasuries is now selling them. And we've got more treasuries to sell than ever before, which is why we're such a bad credit risk right now. Europe doesn't understand that because the Fed is going to end up buying all the treasuries that nobody else wants. And the only way they can do that is to create inflation. And speaking of inflation, oil prices up again on the week, closing around $91 and 30 cents last I check up from $87 diesel prices. All time record high. We're above $5.80 for diesel. I mentioned that when I was on my boat because the boat uses diesel, everybody in the boat industry. But diesel is a big industrial fuel.

32:01A lot of businesses power their machines with diesel. This is a big deal. And higher diesel costs are going to move throughout the entire economy. It's everything that has diesel associated with production or transportation is going to be subject to rising price pressure. So this again does in jive with Trump demanding that interest rates be cut. And you know, looking at the rates, you know, 4.8% on a 10 year, five in a quarter on a 30 year. These are low rates. Look at where rates were in the 1970s and 1980s, the 1990s. I think the average yield on the treasuries in the 1970s was around 7.5%, something like that. And the 1980s was about 10% and in the 90s, maybe 6.5, you know, high 6s, we have low rates.

33:06We're just looking at the post financial crisis rates. That's not reality. We were living in a fantasy, in a bubble. We're returning to reality, except the reality is now we have a lot more debt than we had in the 80s and the 90s. We're a much worse credit risk than we were back then. And so we should pay even higher rates now than we did then. And that's going to happen no matter how much Trump wants to complain. Anyway, the rest of the markets, you know, the markets were down today. You know, the Dow was down 272 points on the day, but you know, managed to finish the week up slightly up point three, S&P and the Nasdaq shrugged off the good news, right? Good news is bad news. And they had small gains on the day and on the week as well. They're up actually a little bit more than the Dow, same with the Russell 2000. So you have stocks generally higher. The goal was only down about 30, 40 bucks.

34:07So not even 1% today. And just on the week, barely down, goal close about 44, 30 silver down about 1.2% today and about a half a percent on the week. So both gold and silver were positive on the week going into the day and they had a volatile week. It's like they got slammed earlier in the week based on the bond yields arising and bond prices falling. Which again, is not even bearish for gold and silver. Bond price is going down is the sign of a loss of confidence in the credit worth in this of the United States or other governments. It's the sign of rising inflation. It's a buy signal for gold. In fact, what would people be doing with the money they get by selling treasuries or selling government bonds from other countries? What would they buy instead? They would buy gold. So if you're worried about your bonds going down and you want to sell your bonds, we're going to park your cash. What other safe haven are you going to use?

35:09Obviously, this is bullish for gold and silver. The traders still haven't figured that out. They're going to figure it out. In fact, I keep here in all these people dismissing the rising bond yields because they say, oh, it's okay. It's because yields are rising for the right reasons. They're going up for the good reason because the economy is so good. There's so many investment opportunities in the booming economy in the Trump economic boom that the businesses are competing with governments or governments are now competing with businesses. And certainly with the AI build out and all the infrastructure and catbacks that's going in there. But I think a lot of that catbacks is coming at the expense of other catbacks. I mean, I've been talking for months and months about what we're not doing. What are we giving up? Where are we under investing in order to free up all this capital to invest in an AI?

36:09But certainly a lot of companies, big tech companies that used to have a lot of cash and they used to park that cash in treasuries. They don't have that cash anymore. They spent it on catbacks and now they're borrowing. So that is true. There is some of that going on, but that's not the only reason that rates are rising. And again, they will point to rates rising all over the world to try to say you see it's not because of a problem in the United States because, look, rates are rising in the UK. They're rising in France, they're rising in Germany. And so it's nothing that we did wrong. Except those countries are also doing wrong. The countries that are seeing an increase in rates also have too much debt, especially debt that they accumulated during the COVID era and even before. But so all these countries that have too much debt, they're having to pay a premium to investors to hold that debt because they know that inflation is going to erode away its

37:13value. And earlier, Switzerland, the yields on a 10 year Swiss government bond are under 45 basis points. That's exactly where they were two years ago. They haven't gone up at all. And if it was true that governments had to pay up to compete with the private sector, well, why aren't the Swiss paying up? Clearly there's a lot more to this than just a good economy with the huge investment in AI that is potentially a deflationary thing. You're talking about 10 year government bonds. So the idea is that this cat-back's investment in AI is going to lead to lower prices in the future because of a productivity boom. So why isn't that also being priced into the yield curve? Why aren't long-term bonds lower if the expectation is that prices are going to come way down because of this boom in productivity? The economy added 162,000 jobs in August. And the unemployment rate held at 4.1%.

38:15It was a strong report so the coverage was uniform, right? Not even close. The daily wire ran the headline, quote, jobs report smashes expectations. Politico covered the same report with quote, surprisingly strong jobs report could set stage for Fed rate hike. Same number, same morning, one outlet hands you a victory lap. The other tells you your borrowing costs are about to go up. And both of them are right, which is exactly the problem. If you only read one, you got half the story. That's why I use ground news. It's an app and a website that pulls every story together in one place so you can read every headline side by side. This one jobs report had 410 outlets covering it. You can also see who owns each source because ownership shapes the narrative. Politico is tagged right there on the screen, owned by Axel Springer, a German media conglomerate. Most Americans reading a Politico story about the Federal Reserve have no idea. And their blind spot feed surfaces the stories one side of the media barely covers it all. I've built my whole career on looking past the headline number to the actual data. Ground news lets you do that with the news itself.

39:16So go to groundnews.com slash shift and you'll get 40% off their unlimited access vantage subscription. That works whether you subscribe yourself or send it as a gift. But make sure you use my link ground news.com slash shift so you get the discount and they know I sent you. That's groundnews.com slash shift. Now we also got some numbers this week on the trade deficit. This is the July number goods and services, the overall trade deficit, which came out at 88.6 billion dollar deficit. 24% higher than the prior month, which was actually revised a little bit lower to 71.2 billion. But this month or July was 24.4% higher than that. In fact, this was the biggest trade deficit in a single month since March of 2025.

40:16And again, what was happening in March of 2025? That was the month before liberation day. And what was going on back then because everybody knew liberation day was coming is companies were rushing to import stuff to get it imported before they had to pay the tariffs. So the trade deficits in the months leading up to liberation day were huge. They were outliers because everybody was rushing to get stuff in before it would be subject to the tariff. So this is the worst trade deficit since then. If the tariffs were going to work, the deficit should be lower. The fact of the matter is they don't work. You know, I had a real world example of how these tariffs actually work. I mean, I know how they work. I don't need the anecdotal evidence, but it's interesting because remember, Trump said that Americans aren't going to have to pay the tariffs that foreigners are going to pay the tariffs.

41:16The producers are going to eat the tariffs. And then there are some other economists that try to argue that no, it's, you know, it's shared, right? The producer pays some, the importer pays some, the consumer pays some. So it's not sure that, you know, the consumers are actually going to pay the tariffs, which of course they are. It doesn't matter if other people along the production chain pay the tariffs first. They will eventually be passed down to the consumer, just like all costs are everything. When you run a business, all of the costs that you incur, your labor costs, your, your, your rent, your insurance, taxes, raw materials, all this stuff is built into the price of the goods that you sell. I mean, that's just how it works. And, and to say that, you know, we're going to have a free lunch here. That was all trying to justify these tariffs or trying to claim that somebody other than

42:21the consumer was going to pay them. But anyway, so I had to buy a, a part for my hyperbaric oxygen chamber that I have. In fact, I was in it today for about two hours. And I had the new part in there. But a part, you know, gave way and I had a, I had to get another part. And the part was $283. I had to, you know, bring it in from Europe. So it came in FedEx. So the part arrives and I don't know, day or two later, I get a bill from FedEx and I owe them $45.80 because of this import. And so I, I clicked on it so I can get a, a breakdown of where the $45.80 came from. $28.30 was the tariff. That's exactly 10% of the price. So must have been a 10% tariff because the part came in from Europe. But I had to pay $45.80. Oh FedEx charged me an additional $17.50 to process the tariff.

43:26So not only did I pay 100% of the tariff, I paid 162% of the tariff because of this tariff, my $283 part cost me 16.2% more even though the tariff was only 10%. So it's worse, I had to pay more than 100% of the tariff. The company in Europe, they didn't pay anything. I bought the parts from them. They had it FedExed over here. FedEx, yes, they paid something. They obviously paid $28.30 and then they billed me for the $28.30 plus an additional $17.50 to process that payment. This is how it works. I wanted to take that bill and maybe send it to the president and say, hey, I got this bill. Can you pay this for me? Or what if I would have called the hyperbaric company and say, hey, I got this tariff bill. Can you pay me for it? Of course they wouldn't pay me. It's my tax. It's my problem. It's not their problem.

44:29Tariffs are taxes and they are paid by America. There's no, I posted this on X and a lot of people are like, well, just buy the part in the US next time. There is no part made in the US. I can't buy something made in the US that isn't made in the US. And in fact, I had to buy this particular part from the company that I bought the chamber from and the chamber company is in Europe. Now some is to well, why don't you buy a hyperbaric chamber from an American company. Even if I did, the chamber is not made in America, even the US companies that sell these things, they manufacture them abroad. There is no plant in America manufacturing a hyperbaric oxygen chambers. So if we band it or cut off all trade, they just wouldn't be here. You couldn't buy them. But the fact of the matter is I paid 162% of the tariff.

45:30And my experience is not unique to me. This is the same experience that everybody is having. It's just that the Trump administration is refusing to acknowledge it and neither are all of the Republican cheerleaders that defend everything that the president does because he's popular in the Republican Party or because he's a Republican and they don't want to be critical. In fact, I was listening to an interview with Howard Lutnik again, talking about how great tariffs are and how it's causing all these companies to be bringing their manufacturing back to the United States. And he was speaking specifically about semiconductors. And he said, if we have tariffs on these semiconductors, it's going to force companies to manufacture the semiconductors in America to avoid paying the tariffs. Well, that's not really how it works. To the extent that they end up manufacturing in America, it's not so they can avoid paying

46:34the tariffs. It's so that they don't have to charge their customers in America, the tariffs. And to the extent that that actually happens. And I don't think it's going to happen because I don't think most businesses are going to have confidence that the tariffs are going to be there long enough to receive a return on the investment. I think they'd rather just sell fewer semiconductors, although the demand right now is booming. They can pretty much price them however they want and people are going to pay the price. So I don't think they care about that. But assuming what Howard Lutnik claims would happen actually happened. And in order to avoid having to charge their customers tariffs, companies started to manufacture semiconductors here in America. Because semiconductors would be a lot more expensive than the ones that we were importing. Obviously, I mean, if America could produce semiconductors competitively, we would already be doing it.

47:35If we need protection in order to do it, it means that our prices are too high. And if you protect American businesses using tariffs, the loser is the consumer. So either way, the consumer is going to pay more, either the consumer pays more because he buys an import and pays the tariff or the consumer pays more because he buys a more expensive product that was made in the United States. Now a lot of people will say, well, at least it's made in the United States. That's a good thing. It's not a good thing because if I have to pay more money, if I'm an American consumer and because of protectionism, certain goods are more expensive, I have less money to buy other things. There is going to be job losses in other parts of the economy because I can't spend money that I would have been able to spend, but I spent it on these more expenses to semiconductors or whatever. Whatever product is being protected, whatever jobs you save in the politically favored industry

48:39that gets government protection, they're going to be lost someplace else. You know, I read one of the newsletters that, you know, we're put out by Schiff Sovereign. And again, if you're not getting our newsletter, you got to read these newsletters. There's a lot of really, really good stuff in there, but in the one that came out, I think it was either today or yesterday. It talked about a satirical essay by Frederick Bastier saying that the government that we needed a tariff on a particular thing that was really harming candle makers, that candle makers were having a tough time competing with this one thing and it was harming their industry. It was causing a loss of jobs in candle production. And that was the sun, right? He said that sunlight is causing job losses for candles. After all, it was always dark. We would need a lot more candles. So he was saying what we need to do is require all buildings to basically enclose all their windows and all their doors so that even during the day, no natural sunlight comes in.

49:45And that would cause candle makers to make more money because, you know, they would obviously sell a lot more candles if you had a Burnham 247. But of course the ridiculous part about that is now you would be forcing people to buy candles that they don't really need because if they have light, they don't need a candle. But if all these people had to spend more money on candles because there was never any light in the house, what would they have to give up? What jobs would be lost in other industries because their customers didn't have any money left over because they spent it all on candles. Now, past the day knew this, right? He was being, you know, facetious, but he was drawing a point, making a point by using this ridiculous far-fetched analogy because people could obviously see how ridiculous this is to try to get rid of sunlight, which is a natural benefit to everybody. You know, candles are solving the problem when there's no light, right? That's why we needed candles.

50:45If there was always light, we wouldn't need candles at all. So the whole purpose of the candle is to deal with a situation where there's no light. You wouldn't go out of your way to create a situation where there was no light. But that's exactly what we're doing. It's the same thing. As absurd as that is, it's just as absurd to have protectionism for anything. So everything that they are trying to do. And of course, this was an example. This was being used because the government back then was trying to protect a particular industry from competition by using tariffs. And this was to illustrate the absurdity of what the king was trying to do. Well, it's just as absurd when we're trying to do it. Also, I wanted to point out another thing that happened earlier in the week that made Gold Rally come back from the sell off. About that thing, Gold was up about a hundred bucks that day is you had Fed governor Waller was interviewed. And he said, I think maybe this was just yesterday, but he said that as long as we keep making

51:51progress in our goal of getting inflation down to 2%, he's fine leaving rates for where they are. So he's not inclined to hike rates. What is he talking about as long as we continue making progress? We're not making progress. I mean, we stopped making progress years ago. It's been 65 months of above 2%. But the progress stopped a couple of years ago. Yes, we went down quite a bit from 9% down to 3, 4%. But this is where we've been. In fact, we've been trending higher for the last year. So how can we continue something that's not even happening? The continuation of what's happening now is to go further and further away from 2%. So he said, hey, as long as things stay the way they are, I don't want to hike rates. That flies in the face of what Worsh was saying. He's saying that inflation right now is too high. Well, basically Waller's saying it's not too high because if inflation stays where it

52:53is, he doesn't want to hike rates. Then he also said that he would consider supporting a rate hike if the inflation numbers were hotter than expected. Even though what is expected is still well above 2%. But he didn't even say he would vote to raise rates. He'd just consider it. What the hell is that mean? I mean, he can consider it and then not do it. This is what's going on. You know, I mean, and so, you know, the odds of a rate hike in September dropped quite a bit after he made this statement because it kind of lets you see what other governors are thinking. Now, the probability went up a little bit today based on the jobs on it, but I still think the Fed's not going to hike rates. The question is, how long can Worsh keep talking about hiking rates without doing it? And the market still react to everything he says. At some point, you know, it's, you know, like, you know, the boy crying wolf, the Fed chairman who cries rate hike, eventually no one's going to care.

53:55The traders aren't going to come running just because he said rate hike. So I think the sell off that we've had in gold. And by the way, you know, gold rebounded again, you know, got down to about 4,000. Now it's back above 4,400. But this is a gift. Same thing with silver. Silver peaked back above 70 before, you know, last week, but now it's back down what is 66, but you know, we're well above that $50 breakout level. No, I want to update everybody on what's going on with T gold. I haven't talked about that in a while. And T gold right now is just part of shift gold. And you know, if you're not buying your gold and silver from shift gold right now, make sure and do it. In fact, if you haven't downloaded our app, you should go to the app store and get the shift gold app. But T gold is where you can buy gold in small increments or large increments any increments you want. And we store it. So it's, you know, electronic gold, but you know, it's real gold.

54:58It's in your name. It's not unallocated. It's fully allocated. But you can buy it very close to spot. You can sell it very close to spot. What we're close to launching now, we've been working on this for many, many months. And there, there's a lot of stuff that I'm rolling out with T gold. The first thing that's going to be coming on the platform is debit and credit cards. And the way this is going to work is the debit card. And basically, you could have one card and you can select what you want to do. But if you want to use it as a debit card and let's say you have $10,000 worth of gold stored and you go in a restaurant and you have a meal and you get a check and out of $200 and you pay with this card. $200 worth of gold is going to get sold to pay it. Now, you know, I would not recommend using your gold to buy a meal, use your dollars. But if you don't have any dollars, if all you've got is gold, which makes a lot more sense

55:58to me, then keeping dollars. I mean, if I make gold as easy to spend as dollars, then why the hell hold on any dollars? Because the longer you hold dollars, the less you can be able to buy when you go to spend them. Convert your entire paycheck into gold as soon as you're earning, right? But then if you want to go and buy something and you use the card, it'll just sell off some gold and it'll pay it. Now alternatively, if you don't want to sell your gold, but you don't have the cash to pay for the meal, you can use it as a secure credit card and we'll give you $200 worth of credit against your gold. So you would have borrowed the money, you wouldn't have sold any gold. Now, you got to pay the money back, which you can do by either selling some gold later or sending in some money later when you get the money better yet, right? Better than selling some of your gold, just pay off the debt. But in the meantime, you won't have to sell the gold. So you get the appreciation and the interest rate that you're going to pay is going to be

57:01a lot lower than what it would pay if you use the normal credit card. Credit card interest rates are over 20% right now. To be less than half of that, I don't know exactly what it's going to be. It's going to be pretty damn low because the loan is going to be pretty much riskless because we're not going to let you borrow maybe more than 50% of the value of your gold. So I'm going to have the collateral. See with credit card companies, there's a lot of risk there. People could default, it's unsecured. So credit card interest rates have to be high to cover all the losses. Well, if you use your T-goal credit card, there are going to be any losses. I can't lose. I've got your gold. There's no way I'm going to lose. So I don't have to price that into the interest rate. You don't have to cover all the other losses because the people who pay their credit cards, they're paying for all the people who default because the credit card companies don't know in advance who's going to default. They try, but they make everybody pay extra to cover the loans that go into default.

58:03No one's going to default on these gold loans. I mean, if they do, I just sell their gold. But another advantage of this is you don't have to sell it. What if you have a big capital gain? You sell your gold, you're going to pay the tax. If you just borrow against it, you don't pay the tax. You know how two people can be the same age, but one just seems to have more energy, better sleep and recovers faster. That difference usually has less to do with your actual age and more to do with what's happening underneath the surface. That's why I'm excited to share the true age test from true diagnostic. It's an at home test that looks at markers on your DNA using epigenetics to determine your biological age, not just how many birthdays you've had. What makes the true age test so interesting is that it doesn't stop at a single age number. You get your biological age, your pace of aging, and a breakdown of how 11 key organ systems are aging, including your heart, brain, lungs, and liver. You also get 75 plus longevity biomarkers translated into clear, easy to understand insights

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1:03:24using the code gold at checkout fast growing trees code gold. Now's the perfect time to plant. Let's grow together use gold to save today offer is valid for a limited time terms and conditions may apply. Now, you know, I wouldn't bar too much because you know, you got to pay some interest on these loans. It's not an interest free loan and rates are not zero percent anymore. So you're not going to get ultra low rates. I mean, the government is borrowing it, you know, four and a half percent. So you're going to be paying more than that. But it still might be cheaper than selling the gold and paying the tax even if you end up buying it back, especially if you buy it back at a higher price, you pay the tax and then you buy it back at a higher price. So if you just borrow a little bit of money against it, then you could pay it back and you never had to buy it and sell it. You never incurred a tax and you don't have the market risk. So these products are coming. So what I would suggest people do now, if you don't have an account already set up at T gold, go to the T gold website, just T gold.com as its own website.

1:04:26It's also on the shift gold site, but go right to T gold.com and establish your account. Get ready. And then when the credit cards and debit cards are there, you can get them. But the next phase that we're going to be doing is going to be enabling the customers, any customer, anybody who has a T gold account can send gold to another T gold customer or receive gold from another T gold customer. So people can use gold as a means of exchange. You can pay your bills in gold or you can bill in gold. If you have a small business and you perform a service, you can tell your customers, pay me in gold. This is this is my rate. Here's how you pay me. And that's what I really want to do. I want to make gold used as money. People always want to tease me. Hey, Peter, no one's using gold as money. Okay. Well, you can. Let's get people using it as money because it works a lot better as money than fiat.

1:05:28Fiat had the advantage for a while, but now with technology, it doesn't. And again, too eventually we're going to have a token and either we're going to have my own token, gold, gold token, tokenized gold or I'm going to partner up with some existing tokens. But ultimately you'll be able to withdraw your T gold, not only in physical gold, which you could do right now. Anybody who has an account with T gold can withdraw a physical gold right now and silver. Eventually you'll be able to withdraw it in the form of a token that will be listed on various crypto exchanges. Oh, by the way, I forgot to even mention Bitcoin. Bitcoin was actually, I think up slightly on the week of about 2.4 percent, although it was down by about the same amount today. It's trading just under 80,000. So Bitcoin's balanced a bit. If you have any Bitcoin, go to shift gold and use it to buy gold and silver, right? We use bit pay and we can help you get out. Also again, we remind everybody, you're a Pacific asset management.

1:06:32If you want to not only just own physical precious metals, but you want to get into the mining stocks, these stocks have pulled back, but they're well off their lows, but they still have quite a bit to make new highs. Although some stocks I mentioned on the podcast, they was last week, new month mining hit a new all time record high. I think that's just a leading indicator of what's going to happen to a lot more gold stocks, especially the smaller stocks. Junior miners, I think are going to give you the biggest bang for the buck. That's why we have an oversized position in those junior miners in my own gold fund, the Europe Pacific gold fund, EPG IX. And in our gold separately managed accounts, we also do that at your Pacific asset management. We have separate accounts that we manage in the presses amount of strategy as well as our core strategies of foreign dividend paying and value stocks. So if you're not yet a customer of your Pacific asset management, make sure and go to your pack.com, talk to one of the representatives and get yourself set up before the bottom

1:07:36really drops out of the US dollar and you start to see a lot more money flowing, not just out of US treasuries, but out of US equities into much better valued global equities and emerging markets. Anyway, that's it for today. I hope everybody enjoys their Labor Day holiday weekend. I'll be back again next week with more podcasts. So don't forget to like and subscribe to this YouTube channel. If you're watching it on YouTube, even if you're not, you can go over to YouTube and you can still like and subscribe to the channel and continue to follow me on on X. I am marching towards 1.75 million followers. My goal is 2 million X followers by the end of the year. And what is so important about having those followers on X is spreading my message. That's why it's important that if you are following me, whenever I post something, you got to repost it because the more people that repost me, the broader my reaches and the

1:08:41more people who get to hear what I have to say because what I have to say is very important. And there are a lot more people that are saying a bunch of nonsense and I got to, I got to cut through all that. My voice has to somehow get loud enough to overcome all that. Anyway, have a great weekend everybody and I'll see you next week.