Will Lower Margin Requirements + Iran War = New Highs For Gold? | Andy Schectman

**Adam Taggart** (0:02)
And we should be live. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Taggart, welcoming you here for a special Sunday morning live stream with the precious metals maven himself, Andy Schectman. Andy, thanks so much for joining us, my friend.

**Andy Schectman** (0:15)
Good to be here. Thanks for having me.

**Adam Taggart** (0:18)
You're very kind to do this, Andy. And we got a lot to talk about. First, I just want to apologize to our live viewers. We're starting a few minutes late. That's totally on me. I sent Andy the wrong link by accident. It took us a few minutes to work that out. But we're just a few minutes late here, so we'll still get the whole hour in. Andy, also folks too watching, I think I might have said in yesterday's Weekly Market Recap at Lance that today's video was going to be the video on China with Peter Alexander. Obviously, it's not. We're here with Andy to talk about the precious metals. That video is going to come out on Tuesday. Andy, I do just want to flag for you real quick. I don't know if you're familiar with Peter Alexander. He is a long-time China expert. He's a Westerner who's been living in China for 30 years. Luke Grohmann put him on my radar as his China expert, and we do in that discussion talk in a fair amount of detail about how he sees China building a basically gold-backed renminbi settlement currency, and how that basically gives the Chinese government an incentive for the price of gold to rise. So I think both of you are going to find that really interesting, but you might find that section particularly interesting as well. All right. So folks, we're going to have our usual talk with Andy about what's going on in the precious metals. Andy, you're going to be speaking at Thoughtful Money's spring conference in just a week, and I was going to try to give you a break between now and then. But of course, the world keeps making things that we need to react to, and obviously, since the last time we talked, the US has gone to war with Iran, and I think I reached out to you to schedule this live stream when Iran started basically sending ballistic missiles against some of the oil infrastructure of its neighbors in the Gulf. Since then, Iran has choked off the Straits of Hormuz.
Then we've gone in and we've basically blown up the military installation on Karg Island, which is its key oil exporting distribution center. And so obviously, the price of oil has skyrocketed. Global tensions have gotten even higher in the past couple of days. And the big question is, is all of this going to spill over into the precious metals market and eventually start causing a flight to safety there? Now, we haven't seen gold rise dramatically since this outbreak happened. It hasn't fallen super dramatically either. It's still above $5,000 an ounce. But what are you seeing about the wars implications, if any, for the prices of the precious metals here?

**Andy Schectman** (3:02)
Well, I think it'll definitely have an impact.
And it's interesting, the counterintuitive nature of it, because most people would expect in this environment for gold to have taken off immediately. And my dear departed friend, Jim Sinclair, used to say to me, Andy, it's called MOP, Management of Perception Economics, that they want to manage the perception. They don't want to let gold go to the moon. That would signal the wrong thing and would exacerbate their problems financially. Whether or not people want to acknowledge the fact that these markets are managed by inside interests, I'll tell you that every single time I've seen war, and I've been doing this all the way back to the Gulf War, the very first one, I don't know, in the 90s, every single time this happens, the price gets knocked down into the war. And the conventional wisdom is throwing out the baby with the bath water because it's very liquid. I think it's more along the lines of managing the perception of what is exactly happening. But what we are seeing happening, of course, is a major shock on oil. And as oil gets more expensive, you have to understand that the dollar still is the world reserve currency, meaning every nation on earth needs to accumulate dollars in order to buy oil. And in accumulating dollars, the place to put those dollars, rather than leaving them in some account, would be to recycle them into US. Treasuries, which are immediately liquid. And you have to ask yourself, what happens when these nations realize that not only has the dollar gotten stronger for some reason, but so too has the price of oil been going up. These are both moving up in tandem, which is certainly a strain on the bond market. And we are seeing, and Luke Grohmann talks a lot about this since he mentioned, Luke, you're seeing interest rates on the ten-year start to move in the wrong direction. You're starting to see, I believe, a crack in confidence in the entire system, but you're also beginning to see a form of forced liquidation of US. Treasuries simply to get enough money to buy oil.