Beyond the Boom: The Outlook for AI, Stocks, Bonds, and Gold

DISCLAIMER 0:10

The views expressed in this video are those of the panelists and do not necessarily reflect the views of U.S. Money Reserve.

MIKE BARNES 0:20

Welcome to America’s Gold Authority Podcast. My name is Mike Barnes, the Global Gold Forecast. That’s the series we’re in right now, talking about the future, especially the next four years, leading into 2030. And we’re talking with Philip Deal, 35th Director of the United States Men, president of U.S. Money Reserve. And Philip, the first thing I want to talk about right now is the midterms. They’re getting closer and closer. And I know that the projections are changing every single day.

PHILIP N. DIEHL 0:46

Yeah, that’s right. Seems like it’s taken forever to get here, but uh now here we are. One thing that hasn’t changed is the Democrats are still favored to take the House. I think it’s looking even stronger. All the projections are more seats are trending toward uh Democrats in the House. There are no projections leaning toward the Democrats in terms of the number of seats that are moving toward one party or the other. In terms of the money that is flowing toward uh Republicans and Republicans certainly have an advantage in terms of the money. Doesn’t seem to be moving House seats toward the Republicans, but most of the money seems to be going into the Senate races, and that’s really where it’s nip and tuck. And of course, uh the Senate is up for grabs, has been for uh most of the summer. That’s uh the big surprise. The territory has been uh more friendly to the Republicans. The Democrats have been defending more seats. It looks like the Democrats really have a chance to flip the Senate. One of the big surprises is the crypto industry, their super PACs are probably spending a third of a billion dollars in the races, most of it going into the Senate races. It’s just remarkable. They spent a quarter of a billion dollars uh in the last cycle in 2024, a third of a billion dollars they’ll probably spend. They they had just a week ago, they still had about $95 billion to put into the races in the last three weeks. It’s amazing, this little industry. Uh, they’re second only to the fossil fuels industry, even though they’re a tiny proportion, maybe one hundredth the size of fossil fuels. So uh those Senate races appear to be tightening as that amount of money is going into the races, and it’s uh it’s anybody’s guess.

MIKE BARNES 2:53

Philip, I know you talked to a lot of people, and you’ve read a commentary very recently with someone who’s worked in the federal government that influences us as well.

PHILIP N. DIEHL 3:02

Robert Rubin was a Secretary of the Treasury while I was a director of the United States men. He’s an 88-year-old. You really can’t get a more respected voice from Wall Street. I really urge people to read this article that was written by Robert Rubin that ran here last week in the New York Times. He really expresses a lot of concern about what could happen at the time of the midterms, and also what could happen between the midterms, really between now and January 3rd, and even after January 3rd, and the possibility for disruptions, and what could happen to our economy if there are disruptions in the transfer of power in the House or the Senate, and what it could mean for our economic well-being. The reality is that the rule of law is crucial to the operation of our economy. We think of our foundation of our republic being built on the words life, liberty, and the pursuit of happiness. The original formulation of that term is life, liberty, and property. That goes back to John Locke. Property was the crucial part of that because at the time that was written, uh, property was recognized as the foundation of liberty. And uh, of course, property is the foundation of capitalism. And at the time, all things were owned by the king, and the king had the right to all property, and the foundation of liberty was in an individual’s right to property. Our right to vote and the protection of the right to vote is that foundation of capitalism, and that’s really what Robert Rubin is talking about. So I think it’s to all of our interests to recognize that our protection of capitalism and our protection of our ability to invest and to get our returns are uh protected by our right to vote.

MIKE BARNES 5:24

Rights are definitely something we should think about, cherish, and know that we have. Those kings that you talked about didn’t have to deal with AI back in the day. AI is something that you showed last week you’re very, very, very strongly having opinions about. And know those opinions are still there because there are so many waves of caution about the future because of AI. What do you feel about after thinking about it for the last week?

PHILIP N. DIEHL 5:48

There are so many aspects of AI. I mean, we can get caught up in the macro concerns about the existential threat that AI represents to uh humanity. I think there are some legitimate concerns about that. I personally can’t sort out those sorts of issues. They’re not the immediate concern that I have. I have other concerns about that. For example, I have uh more concerns and feel like I have more expertise about the enormous amount of debt that we’re incurring and whether or not we can ever uh expect to get a return on investment. The other thing I’m really concerned about is whether or not the American models of AI can compete with the much cheaper models of AI that are being produced in China that can get a return at much lower cost, that aren’t as robust as the American models, but are still very good. And probably uh they appear to be able to meet the requirements of most companies, and that’s really worrisome. And they can do so at maybe one-sixth of the cost, they appear to be only maybe six months or so, or maybe even less behind the US models. And these this is being indicated by studies that are being done by top US institutions like MIT and Stanford, and everyone should be concerned about if you have investments that are in certainly are in AI or simply in passive index funds in the S P 500 or NASDAQ, you are exposed, you are deeply exposed to AI. I’m not urging you just to get out of stocks at all. Uh, I think it’s important to diversify. And bonds are no longer the way to diversify, certainly not as the sole way to diversify a portfolio. Gold is a crucial way to do that, and uh you cannot depend on a portfolio of stocks and bonds to do that. An indication of this just came this morning in the fact that Meta announced that they’re gonna have to invest a lot more money, they’re gonna have to borrow a lot more money in order to maintain their pace of AI development a lot more than what was expected. And their stock price immediately took a 6% hit because of that borrowing. And as a result of that borrowing, their free cash flow is going to go much more negative. It’s already negative. This is big because Meta, like so many other of these big companies, had very positive cash flow, but they’ve all gone negative because of how much debt they’ve had to go into in order to fund AI. I think this is really important because it raises the question whether or not any of these companies are going to be able to end up paying off their debt that they have to incur. And these Chinese companies are not having to go so deeply into debt because their models are so much cheaper.

MIKE BARNES 9:40

I think there’s no question that midterms are going to affect the economy. I think there’s no question AI is going to affect the economy. That 60-2020 split is going to be so important for so many people because 2030 is just 38 months away. The end of 2030 is just 50 months away. It’s going to be here before we know it. And Philip, I know you’ve talked to a lot of experts. You’ve seen a lot of experts who have great predictions about what’s going to happen, especially with gold, over those next 50 months.

PHILIP N. DIEHL 10:10

What we’re looking at here is a comparison of 10 of the top forecasters of the next four years through 2030. And only one of them forecasts both gold and stocks, and it’s Ed Yardini. And you can see his forecasts for gold and stocks, and he forecasts that gold will outperform stocks by about four and a half to one. You see him at the second position at the top for gold, and in the bottom position in the tenth position for stocks, and he’s expecting about ten thousand dollars at gold in 2030, and about ten thousand for the stock market, at about a twenty-nine point seven percent increase. So he’s very optimistic on both, but still he’s looking about a four to four and a half to one increase for gold. You also see a a couple of very optimistic increases for stocks at about fifteen thousand, which represent almost a doubling in stock prices. But you see much more optimistic increases for gold prices. These are the top estimates for gold and stock prices.

MIKE BARNES 11:44

The next graphic that you have is talking about the expected return for gold compared to the S P 500. And the numbers here are very surprising as well. Yes, indeed.

PHILIP N. DIEHL 11:54

So what I’ve done here is the left graphic is the averages of the graph that I just showed you. I just took the averages of what was on these graphs, and you can see that it’s about a two to one ratio, just like the two to one ratio that I came up with. The numbers are different, they’re higher. Mine was 35% and 15%. So these are much more optimistic increases, but it’s the same two to one ratio, gold over stocks. So, what is the lesson here? Gold will perform by a margin of two to one better than stocks. This is really strong guidance about where our mindset ought to be as we allocate funds between stocks and gold. When we start talking about the old broken 6040 allocations that don’t include gold, this tells you why uh gold is a crucial part of those allocations. We know that the bond allocation no longer works. There are younger uh investors who don’t need income. Uh, they are looking for more growth. And when you look at this kind of growth coming from gold over the next four years, then a 50, 10, 30 may make a lot of sense for them because of the strong growth this indicates from gold as opposed to uh stocks. So that’s one of the things that come from this sort of analysis is that different portfolios allocations work for different people depending on what their interests are, where they are in their portfolio needs, where they are in their lives. And we’re gonna talk more about that in future uh podcasts.

MIKE BARNES 14:09

I think that’s what’s so impressive to me is that we’re not just talking about something that’s short-term, that we’re looking at the short-term investments. People in their 40s and 50s can play the long game. And when you’re playing the long game and you look what gold’s just gonna do by 2030, who knows what’s gonna happen after that, which is another great reason to make sure your portfolio goes to that 60, 20, 20 or even 60, 1030, as you mentioned.

PHILIP N. DIEHL 14:34

I’m really constrained in talking about uh the long term. Uh, and and one of the reasons is because the data that is available to me, the best data that’s available to me, goes through 2030. I believe the data uh indicates what is likely to happen over the next decade. So I think this is guidance that goes beyond 2030. I think the debt that we see building in the world, the sovereign debt that is building in the world, I think the inflation that is building in the world, I think the energy prices that are uh building in the world today, I think these are here for the long term. I don’t think they’re gonna go away. So I think we need to be ready uh and we need to invest with the knowledge or the expectation that they’re gonna be here for the long term. I’m telling you what I expect, uh, but the data confines me uh and my confidence to really the next four years.

MIKE BARNES 15:49

Data driven but cautiously optimistic. Philip Diehl, you’ve shown us so much about the global gold forecast. Thank you so much for joining us today. Thank you, Mike. That’s all the time we have for today’s episode. On behalf of all of us here in the U.S. Money Reserve Studios, thank you so much for tuning in. If you have any questions or you want to learn more about today’s episode, you can call the number in our episode description and speak with one of our friendly account executives. They’re going to be happy to answer any questions you may have about precious metals and the strategic role they can play in achieving a secure and comfortable financial future. I’m Mike Barnes. We will see you next time on America’s Gold Authority Podcast.

DISCLAIMER 16:32

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