The Man Who Said Sell Gold in 1980 Has a New Warning | Mark Skousen

Summary

Mark Skousen says he is cautious on gold and silver in the near term, despite expecting persistent inflation and warning of a possible U.S. currency crisis. He argues that rising real interest rates and a potentially tighter Federal Reserve could weigh on precious metals. He prefers dividend-paying stocks, especially royalty companies, over bonds or non-dividend-paying miners.

Markets and macroeconomic outlook

• Inflation and Fed policy: Skousen describes the U.S. as entering an era of “constant” or persistent inflation. He cites an inflation reading of 3.6% and says inflation remains above 3%. He sees a December rate hike as possible, particularly if bond-market yields rise.
• Money supply: He attributes inflation partly to a roughly 40% increase in the money supply during the pandemic. He says growth has since slowed to around 4–5%, but believes it may need to fall further to approach the Fed’s 2% inflation target.
• Interest rates and metals: Skousen says real rates rising faster than inflation are unfavorable for gold and silver. He doubts rates could reach the 21% level associated with Paul Volcker’s anti-inflation policy, given today’s much larger deficits.
• Government debt: He warns that federal borrowing—about $2 trillion in new debt, by his account—and rising interest costs could contribute to a currency crisis. He also refers to roughly $13 trillion in debt needing refinancing; the subtitle’s wording about this figure is unclear.
• Economic growth and AI: He cites 3.4% third-quarter GDP growth and 13.8% real growth in business-to-business spending in the second quarter, attributing much of the business investment rebound to AI. He is broadly optimistic about AI-driven productivity and technology, while warning that AI-related layoffs create labor-market risks.
• Energy and inflation: He says higher oil, gasoline, and diesel prices can raise costs across the economy. The interview cites WTI above $100 and Brent around $110.
• Business activity: Skousen argues that business spending deserves more attention than consumer spending, saying it is nearly twice as large. He also cites the Solow growth model’s estimate that technology and innovation account for 75% of economic growth.
• Monetary-policy lag: Citing Milton Friedman, he says the effects of tighter monetary policy can take six months to two years to appear.

Investment views and recommendations

• Gold and silver: In 1980, Skousen advised investors to sell gold and silver and buy stocks and bonds. He recalls gold at about $800 an ounce and silver briefly near $50 at the time.
• Current silver view: He had previously called $50 a low for silver. The interviewer says silver had recently tested about $40.52. Skousen notes that silver has industrial as well as monetary demand and sees signs of recovering demand, but does not present $50 as a guaranteed floor.
• Bonds: He says he avoids bonds, including longer-term bonds, which he expects to be under pressure.
• Preferred holdings: He favors dividend-paying stocks and royalty companies:
  • Franco-Nevada: He recommends it as a conservative royalty-company alternative to miners, citing stable earnings, dividends, and a policy of raising them.
  • Main Street Capital (MAIN): He says he has recommended it for years and highlights its dividends.
  • Kinross Gold: He says he recommended it the prior year, when it rose about 300%, then sold after it fell more than 30% this year and switched to Franco-Nevada, which he described as around break-even.
• Portfolio return: Skousen says investors should aim to grow portfolios by about 10% a year to keep pace with inflation, taxes, and other threats to wealth. This is his stated view, not a guarantee.

Framework and cautions

• Monitor money-supply growth, CPI and PPI, and bond-market yields when assessing the Fed’s likely direction.
• Compare real interest rates with inflation when considering the outlook for gold and silver.
• Track business investment and supply-chain spending, not just consumer spending, as indicators of economic momentum.
• In a high-rate environment, Skousen prefers dividend-paying equities and royalty companies over bonds and non-dividend-paying miners.
• He cautions that AI may support growth but can also displace workers, and that tighter monetary policy may affect markets with a long and variable delay.

Disclosures

The interview’s New Orleans Investment Conference coverage is presented by Dakota Gold. No explicit “not financial advice” disclaimer appears in the subtitles.

Presenters and sources

• Presenter: Jeremy Szafron, Kitco News
• Guest: Mark Skousen, identified in the interview as an economist, Chapman University professor, founder of FreedomFest, and Oxford Club strategist
• Organizations and publications mentioned: Kitco News, The Oxford Club, Forecasts & Strategies, Chapman University, and FreedomFest
• Other people and economic references cited: Paul Volcker, Kevin Warsh, Jerome Powell, Ben Bernanke, Milton Friedman, Robert Solow/the Solow growth model, Steve Moore, Larry Kudlow, and Benjamin Franklin
• Sponsor: Dakota Gold