Schiff Sovereign Podcast

We write a lot about the US government’s dismal financial condition— $36.2 trillion in debt, $1.1 trillion in annual interest expenses, and a $1.8 trillion annual deficit. But in today’s podcast we take a closer look at the numbers and the government’s actual balance sheet as if it were a business, including all of its assets and liabilities. The government doesn’t just have debt. Offsetting that debt is a pretty substantial pile of cash, financial assets, and other resources like land or gold. Some of these assets are significantly undervalued and worth trillions of dollars more than what the government reports. So we dove into the numbers today to determine what the government’s actual “net worth” is, i.e. if you add up all the assets and subtract the liabilities (including the debt). Spoiler Alert: Uncle Sam’s net worth is horrifically bad… on the order of MINUS $100 TRILLION. In other words, according to their own financial report, the situation is much worse than just the $36+ trillion debt. And it really needs to be addressed immediately. We’ve been writing for a couple of years that there is a very, very narrow window of opportunity to put the US government’s finances back on the right track. And there are few signs right now which appear to be helpful. But other developments are frustratingly counterproductive… and even destructive. Restoring confidence is a HUGE part of America’s recovery… and, let’s be honest, this administration isn’t helping restore confidence when it threatens allies with tariffs, or blames Ukraine for being invaded. It takes us back to what we wrote yesterday regarding Warren Buffett’s somber admonishment: maintaining a sound currency “requires both wisdom and vigilance,” and based on what we’re seeing right now, that’s far from a forgone conclusion. Click below to listen in to today’s episode. https://youtu.be/f1-1X29_cO4

I want to present two choices for you to pick from. One is a world leader who was recently sued by a transgender prison inmate who felt that this person’s recent executive order was unfair. The second is another world leader who has suspended elections, forcibly presses people into the military, has closed his border, and has complete control over the press and the flow of information. If you were forced to label one of these two as a dictator, which would it be? Most people would probably think the second guy. And yet our dear friends in the legacy media continue to insist it is the first. There’s already been so much ink spilled this week over who called who a dictator, and the press has been obligingly deranged in its coverage. But we received enough questions from readers asking for our thoughts on the matter that we thought we’d weigh in on Ukraine, Zelensky, and the standard of being a dictator in 2025. https://www.youtube.com/watch?v=lcj4D54lFRA

Last summer, the Federal Reserve wanted you to believe that inflation was a thing of the past. Sure, just about every category of consumer goods had increased in price. Electricity rates had increased 5% year over year. Rent and housing costs were up 5%. Hospital care had become 6% more expensive. Food prices were up. Fuel prices were up. Auto insurance had risen by a whopping 18.6%. Yet, bizarrely, the overall inflation average was just 2.9%. And based on that number alone, the Federal Reserve had all but declared victory against inflation. We knew it was BS. And, after diving into the numbers, it didn’t take us very long to realize why. It turned out that, back in the summer of 2024, used car prices were falling dramatically— down around 11% year-over-year. You probably remember what happened: during the pandemic, supply chain snarls and factory closures caused used car prices to go through the roof. Eventually, prices peaked… and then started to fall. By July 2024, used car prices were still on their way down… essentially returning to a more ‘normal’ level. And based on the way that the government calculates inflation, the huge drop in used car prices dragged down the overall average, making the headline inflation rate appear smaller than it really was. We wrote about this last summer. And we predicted that the decline in used car prices would soon cease… essentially eliminating the key drag that was holding the inflation rate down. That has now happened. And as of last month, used car prices are no longer falling… and the overall rate of inflation is once again on the rise. This is where our discussion begins in today’s podcast, and it’s an important one. We talk about why, at this point, lingering inflation is a major challenge. And it’s becoming a more likely scenario. There are obviously some forces within the government that are working really hard to cut spending. There are also legions of misguided (or flat-out corrupt) politicians who are fighting to prevent those budget cuts from happening. It’s a see-saw right now and could go either way. But, at least for now, the government is still spending taxpayer money like a drunken sailor. Last year’s budget deficit was nearly $2 trillion. They’re already on track to repeat that this year. All of that deficit spending adds to the $36+ trillion national debt. But what makes matters even worse is that an unbelievable $28 trillion of the national debt will have to be refinanced over the next four years, according to Federal Reserve data. (We show you the Fed’s data in the podcast— it’s a chart you’ll want to see.) The key problem, of course, is that interest rates are significantly higher today than they were several years ago. So when the Treasury Department refinances that $28 trillion in debt, it will be at a MUCH higher rate. Think about it— if most of that debt was sold at a 2% rate, but now they have to refinance at 5%, then that’s an extra 3% interest to pay on $28 trillion— or $840 billion per year in additional interest. Remember that the government’s interest bill is already $1.1 trillion per year. So in four years it could easily eclipse $2 trillion per year. Again, this is just the amount of interest. It’s also pretty clear that a lot of foreign governments and central banks— who own a huge chunk of that $28 trillion which needs to be refinanced— are looking to diversify away from the dollar. It’s already happening; obviously there are the loudmouthed BRICS countries that have started trading with one another in their own currencies, and thus begun reducing their dollar holdings. But even supposed ally nations in Europe are starting to trade their US dollar reserves for gold. This is setting up a precarious situation… because if foreign governments and central banks continue reducing their dollar exposure, then who is going to buy up all that $28 trillion worth of US government debt that needs to be refinanced? Well, the only remaining lender is the Federal Reserve. And as we’ve discussed before, the Fed buys government bonds by printing money… which ultimately causes inflation. During the pandemic, the Fed printed $5 trillion and we got 9% inflation. Over the next four years the Fed might have to print a good chunk of that $28 trillion just to help refinance US government debt. So what will inflation be? No one knows. But probably not their magical 2% target. The only way out is to slash government spending. And certainly there is a lot of low hanging fruit for DOGE to cut, which could get the deficit (and therefore inflation) under control. But this is far from a risk-free proposition. And that’s why it still makes so much sense to have a Plan B. We discuss all this, and more, in today’s podcast— and we hope you take time to listen in here. https://youtu.be/OKlpqLzY5yo?si=TF3Qp1YD1bCyc_Zr PS- We’re still running a limited time promotional offer on our premium investment research service The 4th Pillar, which includes research on several undervalued gold companies, as well as many other real asset investments. But this 50% discount on the annual subscription price is ending soon. Click here to find out more.

We recently received a question from a reader asking for my thoughts on crypto. He said we’ve been talking about gold a lot lately, the gold price, and how the price could go a lot higher. Shouldn’t we hold the same views on crypto, given everything that has happened with Bitcoin over the last year or so? We ended up doing a whole podcast about this today, We talk a lot about gold, and a lot about crypto. To clarify, I’m not anti-crypto. In fact, I brought Bitcoin to our audience’s attention back in 2013, when the price was under $100. But there are some differences to gold. Right now, I think there are some major catalysts that could drive the price of gold much higher. It’s a matter of arithmetic, and we walk you through the math on it. The other important thing is that while gold is at an all time high, gold related businesses have been in the dumps for a long time. And that’s a bizarre anomaly that is simply not going to last. Conversely, that same dynamic doesn’t seem to exist with crypto related businesses. And we talk about, in today’s podcast, Microstrategy, as perhaps the best example. This is essentially now a Bitcoin holding company, with 478,000 Bitcoin, valued at around $45 billion. Yet Microstrategy’s market cap is almost double that. So if the point is to buy Microstrategy stock as a proxy for Bitcoin, you’re actually paying double the price. Versus with gold, we have the opportunity to pay less than two times forward earnings for gold companies that have an all in production cost of $1,500 per ounce— roughly half the price of gold. So it’s a completely different dynamic, and we explore all this and more in today’s podcast. We even talk about the Microstrategy convertible notes, and why it’s frankly wildly inappropriate at this point to even compare “crypto” and gold. You can listen to the full podcast below. https://youtu.be/gdIO-mYQWj8

In the year 1025, the Byzantine Empire stood at the height of its final golden age. Basil II had just died, leaving behind a vast and wealthy empire stretching from Southern Italy to Armenia. At the heart of its economy was the solidus, a gold coin that had served as the bedrock of Mediterranean trade for centuries. Merchants from Venice to Baghdad had so much confidence in its purity that the solidus became the primary currency for international trade as far away as China. And this ‘reserve currency’ status allowed Byzantium to project economic power far beyond its borders. But as the empire declined, so did its currency. Successors debased the solidus to cover military costs, mixing in copper and silver until it was barely recognizable. By the late 11th century, merchants could no longer rely on the Byzantine government to maintain the purity of the solidus… so traders turned to a new, up-and-coming alternative: the Venetian ducat. This pattern has repeated itself for thousands of years: reserve currencies come and go, and are eventually displaced by another. Before the solidus, Rome had set the standard with its denarius, but centuries of inflation and political collapse led to its demise. After Venice, the Spanish real de ocho became the world’s preferred trade currency, thanks to galleons loaded with New World silver. When Spanish power faded, the Dutch guilder took over, only to be replaced by the British pound sterling, which reigned until two world wars left Britain financially exhausted. Even the US dollar, during its first two and a half decades as the global reserve currency, was based on gold, until in 1971, the dollar was removed from the gold standard. The whole concept of fiat currency (i.e. paper currency which relies entirely on trust and confidence of the issuing government) holding coveted reserve status is a new phenomenon. That means trusting the largest debtor in the history of the world, trusting the US financial system, abiding by the US government’s regulations, and dealing with the whims of their central bank—despite its mismanagement, soaring debt, and reckless policies. So much can go wrong. And at some point in the future—whether years or decades from now—the US dollar will lose its status as the world’s reserve currency. No currency has ever held that title forever, and it’s naive to assume the dollar will be the exception. When that moment comes, future historians will look back in astonishment, wondering how it lasted as long as it did. Because a system built entirely on trust can only survive as long as that trust remains. And for most of this century, the US government has proven time and again that it cannot be trusted. We explore this topic in depth in today’s podcast, and discuss how and why gold will be the beneficiary of the dollar’s loss. We also discuss: The short term “wins” possible by using tariffs as a political tool The long term damage to the dollar done by threatening allies What could replace the dollar as the global reserve currency The benefits of holding physical gold (for individuals and central banks) Investments that offer exposure to gold’s upside, without paying all time highs for physical bullion We also mention a gold company that we are profiling this month for subscribers to our investment research newsletter, The 4th Pillar, which focuses on real asset investments. And if you’d like to learn more about The 4th Pillar, which we are offering at a discount for a limited time, click here. You can listen to the podcast here. https://youtu.be/ALVdo5Xu0Ms

Yesterday, Nvidia—the company which makes GPUs, including for AI— suffered the largest single-day market value loss in history. The stock dropped 17.4% wiping $600 billion from its valuation in hours, and actually pulling the entire Nasdaq Composite down 3.4%. To put that in perspective, this amount of value loss is like if the entire company of Netflix AND AT&T simply disappeared. What caused this? A Chinese AI startup called DeepSeek. Over the weekend, it revealed a new large language model (LLM) that matches the output of OpenAI’s ChatGPT and similar models but at a fraction of the cost. Here’s the kicker: DeepSeek trained its LLM with just $5 million and 2,000 low-tech Nvidia GPUs. Compare that to ChatGPT’s $100 million budget and over 100,000 cutting-edge GPUs. Venture capitalist Marc Andreessen called this AI’s Sputnik moment. And that’s true. It was 1957 when the Soviets launched Sputnik into space, which made the Americans realize how much they needed to catch up. There was a lot of panic yesterday, and it’s easy to understand why. The whole industry felt they had a competitive advantage that no longer exists. But the reality is, this is good news for everyone. And this is the topic of our podcast today. Many of you know that I’m the chairman of a emerging technology company which makes extremely powerful and efficient semiconductors. It’s completely unrelated to AI, so DeepSeek doesn’t have any impact. But I reached out to a number of people in the business to help me understand this better. And overall there are a few conclusions that are pretty obvious. One, Nvidia is still going to be able to sell all the GPUs they can produce. The difference is now they will be selling to more people. The days of Nvidia delivering GPUs by armored car are long gone. And now these professional grade chips are going to be available to even the lowliest of AI start-ups. It also means that AI start ups can launch their businesses and develop their technology with a smaller amount of money. Instead of having to raise half a billion dollars just to get started, they can create a viable product for just a few million dollars now. That means more innovation, and hence more productivity for everyone. The last thing is the market rout yesterday was classic overreaction and panic that extended to sectors that still have me scratching my head. There was even a sell-off in natural gas stocks, which is absurd. We talk a lot about real assets, and why they are such a smart buy right now. And natural gas companies are a great example. Some of these businesses are well managed, profitable, dividend paying, and have pristine balance sheets. And yet the market is now giving them away. We discuss all this and more in today’s short podcast. https://youtu.be/iNV0PQOLSN8 PS- Starting today we’re launching a promotion on The 4th Pillar, our premium investing newsletter that focuses on undervalued real asset businesses. Click here to learn more.

The Wall Street Journal this morning released its latest economic forecast survey. This is where they ask leading economists what they think inflation and economic growth will be in 2025 and beyond. The results were pretty incredible. Between the last survey, in October before the election, and this month’s survey, the predictions for US economic growth have increased dramatically. Optimism is clearly everywhere, not just in the economic forecasts but also the labor market, stock market, etc. One of the reasons for that, obviously, is that Americans were just promised a New Golden Age of prosperity. We’ve written before, many times, that America’s gargantuan fiscal challenges are still fixable. But a Golden Age? Is that really feasible? Well, above everything else at this organization, we are intellectually honest, and we let the math be our guide. And in today’s podcast, we actually do the math at a high level and discuss whether that Golden Age actually is possible. Spoiler alert: it is! But it’s gong to require what I believe are modest budget cuts— roughly $300 billion— and significantly higher economic growth. When you think about it, it’s really something to be said that the US, i.e. the most advanced economy in the world, only clocks around 2% “real” GDP growth each year. Given America’s population growth, the literally tens of trillions of dollars of investable capital, the massive pool of talent, and innovation, 2% growth is utterly pathetic. Talk about under-achieving your potential. It’s deregulation, ease of doing business, and tax policy that can really move the needle on that growth. And these are all completely realistic goals. At the same time, there are so many forces and entrenched special interests that will battle against reform. So while there’s plenty of reason to be optimistic, it’s not a forgone conclusion. That’s why it makes so much sense to have a Plan B. We talk about all this and more in today’s podcast, as we walk through the math on the New Golden Age. https://youtu.be/utZXEbMAm7Y

It’s hilarious how Joe Biden spent his entire four year administration using tech companies to suppress dissent and censor critics. He now claims those same tech companies are a threat to democracy. He just awarded the Presidential Medal of Freedom to billionaire George Soros, who notoriously uses his money to meddle in elections and fund ultra-woke leftist politicians. But billionaires who fund causes on the right are… a threat to democracy. Biden further believes that he is not responsible for any of the inflation of his tenure, and he expresses no concern about his massive deficit spending and debt accumulation. He simply doesn’t understand: the inflation we are still experiencing has literally been caused by his trillions in deficit spending. And with the national debt now at $36.2 trillion on Joe Biden’s final business day in office, the government is dangerously close to the point of no return. Without serious budget cuts… without a massive regulatory overhaul… and without a major reset in the way the government does business… the US could quickly slip into a debt spiral. The federal government already spends 100% of its tax revenue just to pay for mandatory entitlement spending and interest on the debt. In fact, interest on the debt already exceeds $1 trillion per year, and could easily DOUBLE to more than $2 trillion over the next couple of years. The incoming administration has an extremely limited window of opportunity to put the economy and government finances back on track. I think they have a good chance, and I’m absolutely rooting for them. But success is far from certain… and for that reason it still makes so much sense to have a Plan B. I hope you’ll join us for this discussion in today’s podcast, where we also cover: Why interest rates are rising, despite the Federal Reserve’s cuts Banks’ HUGE missteps that led to massive unrealized losses in their bond portfolios The Federal Reserve’s only option left to bring rates down, and how it will cause inflation Trump’s potential to turn things around, and what happens if he fails The real reason he’s talking about “Buying Greenland” The role of real asset investments in hedging against inflation Why real assets will do well no matter what happens next I encourage you to listen to this super insightful conversation, which is well worth the time to understand where the US is heading. https://youtu.be/yz-3mnjuyr8

In 1913, 24-year-old Charlie Chaplin arrived in Los Angeles, drawn by an offer from Keystone Film Company. Coming from a poverty-stricken childhood in London and a successful vaudeville career, Chaplin found in Los Angeles a place of limitless potential. The city was largely undeveloped, surrounded by orange groves, open fields and dirt roads where coyotes still roamed. But it offered the perfect backdrop for the burgeoning film industry— mountains, oceans, deserts— and a chance to escape the constraints of traditional theater. While San Francisco had flourished during the gold rush, Los Angeles was entering its own boom, fueled by filmmaking. Chaplin quickly became the silent era’s most famous actor, transforming the medium while the city grew into the heart of the movie industry. Like Chaplin, Los Angeles embodied the spirit of creative freedom, shaping modern entertainment for a century. The city, especially Hollywood, became synonymous with the film industry, and perhaps took that for granted. Like California in general, LA assumed that however poorly it treated its residents, however burdensome the regulation, however high the taxes, people would still come flocking like there was gold in the hills. If you ever wanted to be the author of your own decline, follow the example of California, and Los Angeles in particular. Hollywood has chased away its own industry to burgeoning film locations like Georgia, New Mexico, and Toronto. Georgia especially is raking in the benefits from LA’s decline. Los Angeles was a one industry town, and they chased it away. They forced countless lockdowns on the city during COVID, even threatened to cut off water to those who dared to invite guests over. They declared themselves a sanctuary city against federal law, inviting illegals to enjoy a multitude of free benefits— then expected federal dollars to pay for it. They cut police, and refused to enforce basic laws against things like shoplifting, or keep even serious criminals in prison. They destroyed education, from elementary to university. And every business and individual is absolutely drowned in useless permitting. Oh, and with all their idiotic spending priorities, somehow fire fighting, in an area prone to wildfires, seems to be the only thing they were unwilling to properly fund. Who would want to continue doing business there? Or invest there? Or live there? And tax revenue and talented workers are part of the exodus. California ran things into the ground until they no long had money for basic services. But hey, at least people can still get private insurance when the government fails them! Oh wait, California has also run them out of town. Because of California’s regulatory burden many insurance companies no longer do business in the state. And that has left a number of people, including those whose homes have burned down, without insurance. California has long relied on federal bailouts to fund all these idiotic policies. Their COVID lockdowns were paid for with federal tax dollars, and they’ve received bags of cash from the Biden administration to help pay for migrant care. The damage from these fires could easily exceed $50 billion, and again, since they have chased away insurance companies, I have a funny feeling that California is going to have its hand out to the federal government once again to help people rebuild form a crisis that was not only preventable but a direct result of political incompetence. Would you be surprised if the federal government came to their rescue, and US taxpayers ended up paying for poor Paris Hilton’s burned out mansion, because no one would give her insurance? There used to be a saying, “As California goes, so goes the nation.” And to be frank, I think that’s right. The US itself has some deep challenges brought on by the last several years of horrific leadership and terrible priorities. There is, starting next week, an opportunity to makes things right and get it back on track. And I am certainly rooting for them to pull it off. If they don’t, we don’t have to wonder what the future of the US looks like— the whole world can see the failures of the left, in Los Angeles today, laid to waste. And it is a snapshot of what might come if the incoming leadership isn’t able to right the ship. Tune in to today’s podcast where we talk about this in greater depth, including at the end explaining our whole ethos on building a Plan B. https://youtu.be/Egp1_VOjU1k

In the year 500 AD, just a few decades after the fall of Western roman empire, the standard of living for a typical European peasant was pretty grim. Squalid hovels. No sanitation. Short life expectancy. Even food was by no means guaranteed. If you go forward in time, even 1,000 years, the standard of living of a typical medieval peasant in the year 1500 was little changed from his predecessor an entire millennium before. Human civilization barely budged, in fact, until the late 1700s and the advent of the Industrial Revolution, where the combination of new technology, and cheap, abundant energy propelled our species into an era of unprecedented prosperity. As technology became even better, and energy even cheaper, that upward trend has accelerated. On the table in front of us right now are a handful of key technological trends that have the potential to drive human prosperity at warp speed. One of those in particular is the cheapest and most boundlessly efficient energy the world has ever seen. So naturally the US government is doing everything it can to block it and obstruct its progress. It’s obvious that the US, and the world, is for the most part, a big mess. The sheer volume of debt in the world is a major concern and one that creates more inflation, and less prosperity. It’s also a problem that is growing each year at an exponential rate. But this energy issue is a perfect example of how easy it should be to get things moving back in the right direction: just stop going out of your way to deliberately harm your country and its economy. Think about it. If you had to set the table with four key pieces and resources that were necessary to grow out of a gargantuan debt problem, and create widespread prosperity: You would want to have emerging technology for cheap, nearly limitless energy. You would want to have world changing technology to boost productivity to unimaginable levels. You would want to have one of the most successful people who has ever lived, dedicated to dismantling a destructive, bureaucratic administrative state. And you would want to have an incoming government on board with spending restraint and much needed reforms in the public sector. That’s pretty much what’s in front of us right now. On the other hand, if your goal was to make things as bad as possible, you would probably engage in a massive debt bonanza and spending blowout, hobble highly beneficial emerging technology, obstruct conventional energy production, and block win/ win foreign investment deals. These are all things we’ve seen the outgoing administration do just in the last couple weeks. And it almost looks deliberate, by a petty fool, angry he was pushed out by his own party, and lashing out at the country. There is a lot of upside potential on the other side of this, but it is by no means guaranteed, and there is still plenty of risk ahead. That’s why it still makes so much sense to have a Plan B. https://www.youtube.com/watch?v=12v_EGhl2_Y Listen in to today’s episode here.