Larry McDonald: The End of a Rate Hiking Cycle is Great for Gold

Tom welcomes back Larry McDonald to the show. Larry is a New York Times bestselling author, CNBC contributor, and Political Risk Expert. Larry discusses the reach of his recent book, "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers." Larry is concerned about the impacts of rate hikes in Japan and around the world. Central banks are very nervous because they can't assess the damage inflicted by their policies for many months. The Fed doesn't want to admit that financial conditions can overpower them. We're going to see a 500 billion dollar swing in debt servicing. They are trying to scare investors with rhetoric, but the math is stacked against the Fed. The yield curve is showing that a recession is certain. They are trying to regulate the energy markets by drawing from the strategic reserves. However, prices are still continuing to rise. Japan is entering a doom loop between yield differentials and the value of the Yen. This could be a very dangerous scenario, and the only way out is to get help from the Fed. There are of globally players very concerned about the speed of Yen weakening. When markets see the end of a rate hike cycle, we see gold buyers do very well. Gold suffers at the beginning of these cycles. There is a crisis in metals, and we're going to be needing a lot more of them to roll out green energy. Silver is starting to now outperform gold, which likely means speculative money will come into the space. Time Stamp References:0:00 - Introduction2:02 - Japan & Rate Effects6:10 - Lagging Impacts9:12 - Commercial Banks11:20 - Yield Curves12:33 - Midterms & Pivots16:45 - Bank Of Japan & Risk19:05 - Treasury Risks & Gold25:57 - Fed & Miners27:16 - Labor & Inflation29:42 - Refilling the SPR?32:40 - Resource Opportunity33:56 - Rhetoric Reversal?37:57 - Prospects For Silver41:46 - Wrap Up Talking Points From This Episode Serious concerns with Japan's financial system.Energy and how will the strategic petroleum reserves be replenished.The outlook for gold and silver when the Fed finally pivots. Guest Links:Website: http://thebeartrapsreport.comTwitter: https://twitter.com/convertbondAmazon Book: https://tinyurl.com/2p93wy9x Larry McDonald is a New York Times bestselling author, CNBC contributor, and Political Risk Expert. He is also the creator of The Bear Traps Report, a weekly independent Macro Research Platform focusing on global political and systemic risk with actionable trade ideas. Thought-provoking Larry McDonald presents his captivating views on the Trump Administration, U.S. Financial Crisis, European Sovereign Debt, and China’s Economic Meltdown - spiced with actionable risk indicators, risk management lessons, and sprinkled with humor. In 2016, Larry McDonald joined ACG Analytics in Washington, D.C., as a partner with a unique skill set, as one of today’s leading political policy risk consultants and strategists. From 2011 to 2016, he was Managing Director and Head of U.S. Macro Strategy at Société Générale. In 2010, he founded an investment research firm which publishes the Bear Traps Report, focused on Political and Systemic Risk with actionable trade ideas. Larry makes weekly appearances on CNBC as a contributor focused on political and economic risk and opportunities. In late 2006, as Vice President at Lehman Brothers, he led his team into betting against the subprime mortgage market, profiting the firm over $2 billion before its demise. In 2009, he wrote the international bestseller A Colossal Failure of Common Sense, The Inside Story of The Collapse of Lehman Brothers - translated into 12 languages, selling over 400,000 copies. Before working at Lehman, he was the co-founder of Convertbond.com, a website that provided convertible securities information with news, valuation, terms and analysis tools for convertible bonds, convertible preferred stocks, and other convertible securities.