1 00:00:12,628 --> 00:00:14,528 [Elena Reyes] Welcome back to Outside the Dollar, 2 00:00:14,778 --> 00:00:15,777 [Elena Reyes] I'm Elena Reyes. 3 00:00:16,179 --> 00:00:19,730 [Elena Reyes] So June's inflation report came in cooler than expected, 4 00:00:20,030 --> 00:00:22,980 [Elena Reyes] and gold rallied more than two percent on that news, 5 00:00:23,329 --> 00:00:28,179 [Elena Reyes] with traders pulling back their bets on an immediate Fed rate hike. At the same time, 6 00:00:28,329 --> 00:00:31,429 [Elena Reyes] oil is climbing on fresh US-Iran tension, 7 00:00:31,879 --> 00:00:35,079 [Elena Reyes] US debt just crossed thirty nine trillion dollars, 8 00:00:35,479 --> 00:00:40,329 [Elena Reyes] and India and China keep trimming their Treasury holdings while stacking more gold. 9 00:00:40,829 --> 00:00:42,280 [Elena Reyes] Two very different stories. 10 00:00:42,515 --> 00:00:43,865 [Elena Reyes] One backward looking, 11 00:00:44,115 --> 00:00:47,966 [Elena Reyes] one forward looking; and today I want to hold them side by side. 12 00:00:48,466 --> 00:00:51,765 [Elena Reyes] We'll get into what financial repression actually means, 13 00:00:52,165 --> 00:00:58,665 [Elena Reyes] where that term came from after World War Two and why it's showing up in conversations about this debt load again. 14 00:00:59,316 --> 00:01:05,765 [Elena Reyes] I'll also walk through the mechanics behind gold's move this week against the oil and dollar risk sitting underneath. 15 00:01:06,265 --> 00:01:08,515 [Elena Reyes] Then we'll look at India's Treasury holdings. 16 00:01:08,796 --> 00:01:10,396 [Elena Reyes] Now at a six year low, 17 00:01:10,746 --> 00:01:14,846 [Elena Reyes] and ask whether this is really sovereign diversification or something bigger. 18 00:01:15,396 --> 00:01:22,846 [Elena Reyes] And I'll close with a producer price number-the Fed's late July meeting-and one bank's five thousand dollar gold call. 19 00:01:23,546 --> 00:01:27,746 [Elena Reyes] Let's start with that inflation print and what it does and doesn't tell us. 20 00:01:33,171 --> 00:01:37,121 [Elena Reyes] Let's start with a number that surprised a lot of desks this week. 21 00:01:37,671 --> 00:01:41,572 [Elena Reyes] June CPI came in at 3.5 percent year-over-year, 22 00:01:41,822 --> 00:01:43,371 [Elena Reyes] below what Wall Street expected. 23 00:01:44,121 --> 00:01:49,072 [Elena Reyes] Josh Jamner at ClearBridge Investments told Investment News that underneath the hood, 24 00:01:49,271 --> 00:01:52,671 [Elena Reyes] inflation was fairly muted and gold moved on it. 25 00:01:53,121 --> 00:01:59,821 [Elena Reyes] CNBC reported spot gold jumped 1.2 percent to $4,046.60. 26 00:01:59,731 --> 00:02:00,882 [Elena Reyes] 64 cents an ounce, 27 00:02:01,281 --> 00:02:03,831 [Elena Reyes] bouncing off a two-week low in that same session. 28 00:02:04,531 --> 00:02:08,831 [Elena Reyes] So why did a cooler inflation print push gold higher instead of lower? 29 00:02:09,532 --> 00:02:10,481 [Elena Reyes] Think about it this way. 30 00:02:10,931 --> 00:02:14,532 [Elena Reyes] Softer CPI means less pressure on the Fed to hike, 31 00:02:14,831 --> 00:02:16,831 [Elena Reyes] and gold tends to like that environment. 32 00:02:17,581 --> 00:02:19,181 [Elena Reyes] But here's what nags at me. 33 00:02:19,731 --> 00:02:23,632 [Elena Reyes] CPI measures what already happened. It's a rearview mirror. 34 00:02:24,281 --> 00:02:27,031 [Elena Reyes] CNBC's same report flagged something moving. 35 00:02:27,063 --> 00:02:35,463 [Elena Reyes] In real time—oil prices climbing on renewed US-Iran tensions—Americans are now weighing two competing forces: 36 00:02:36,063 --> 00:02:41,663 [Elena Reyes] softer inflation data behind us and an energy shock that hasn't fully worked through the numbers yet. 37 00:02:42,364 --> 00:02:46,313 [Elena Reyes] Oil doesn't stay contained; it works into transportation costs, 38 00:02:46,563 --> 00:02:47,364 [Elena Reyes] food prices, 39 00:02:47,614 --> 00:02:47,963 [Elena Reyes] shipping, 40 00:02:48,264 --> 00:02:50,163 [Elena Reyes] utility bills with a lag, 41 00:02:50,563 --> 00:02:53,864 [Elena Reyes] so the CPI report we're celebrating today might 42 00:02:53,620 --> 00:02:58,819 [Elena Reyes] There might be measuring a world that's already changing underneath it; and that's just one thread. 43 00:02:59,370 --> 00:03:00,270 [Elena Reyes] Zoom out further: 44 00:03:00,819 --> 00:03:06,920 [Elena Reyes] the FX Street piece I read this morning pegs U.S. federal debt above thirty nine trillion dollars. 45 00:03:07,469 --> 00:03:08,069 [Elena Reyes] Add to that, 46 00:03:08,420 --> 00:03:15,219 [Elena Reyes] Times of India reported gold has actually surpassed U.S. Treasuries as the world's largest reserve asset, 47 00:03:15,469 --> 00:03:20,770 [Elena Reyes] with India and China both trimming their U.S. Treasury holdings while stacking gold instead. 48 00:03:20,756 --> 00:03:29,205 [Elena Reyes] That, so which is it-is this cooling inflation report a real turning point or just a pause before oil works its way through the system? 49 00:03:29,705 --> 00:03:31,756 [Elena Reyes] I can't answer that from one data print. 50 00:03:31,955 --> 00:03:42,506 [Elena Reyes] What I want to figure out is why $39 trillion in debt keeps showing up in every one of these conversations and what it actually does to the money sitting in your pocket. 51 00:03:48,276 --> 00:03:49,326 [Elena Reyes] Building on that, 52 00:03:49,676 --> 00:03:54,826 [Elena Reyes] what does $39 trillion in federal debt actually do to money over time? 53 00:03:55,225 --> 00:03:56,876 [Elena Reyes] Let's think about this practically. 54 00:03:57,225 --> 00:04:01,725 [Elena Reyes] You can't tax or cut your way out of a debt that size. Without political pain, 55 00:04:01,826 --> 00:04:03,725 [Elena Reyes] nobody in Washington wants to own. 56 00:04:03,876 --> 00:04:07,376 [Elena Reyes] So governments have historically reached for a quieter tool. 57 00:04:07,576 --> 00:04:09,626 [Elena Reyes] It's called financial repression. 58 00:04:09,876 --> 00:04:15,975 [Elena Reyes] In plain terms, you hold interest rates below the inflation rate so the debt shrinks in real terms. 59 00:04:16,269 --> 00:04:19,269 [Elena Reyes] Even while the number on paper stays exactly the same, 60 00:04:19,819 --> 00:04:20,319 [Elena Reyes] the U.S. 61 00:04:20,370 --> 00:04:22,519 [Elena Reyes] used this playbook after World War Two: 62 00:04:23,019 --> 00:04:26,319 [Elena Reyes] debt relative to the economy was over one hundred percent, 63 00:04:26,620 --> 00:04:27,919 [Elena Reyes] and rather than default, 64 00:04:28,169 --> 00:04:32,370 [Elena Reyes] policymakers kept rates capped while inflation ran hot for years. 65 00:04:32,919 --> 00:04:34,219 [Elena Reyes] The debt didn't disappear, 66 00:04:34,620 --> 00:04:36,669 [Elena Reyes] it got smaller in real terms, 67 00:04:36,919 --> 00:04:37,269 [Elena Reyes] quietly, 68 00:04:37,620 --> 00:04:38,719 [Elena Reyes] one year at a time. 69 00:04:39,419 --> 00:04:40,269 [Elena Reyes] Who pays for that? 70 00:04:40,569 --> 00:04:41,219 [Elena Reyes] Savers. 71 00:04:41,519 --> 00:04:44,969 [Elena Reyes] If your account earns two percent and inflation runs at the same rate, 72 00:04:44,969 --> 00:04:45,019 [Speaker 2] you will have to pay a higher interest rate. 73 00:04:44,596 --> 00:04:46,245 [Elena Reyes] At the three point five per cent. 74 00:04:46,295 --> 00:04:48,096 [Elena Reyes] June CPI print settled at, 75 00:04:48,396 --> 00:04:50,596 [Elena Reyes] you're losing purchasing power every year, 76 00:04:50,946 --> 00:04:53,245 [Elena Reyes] even as your balance keeps growing on paper. 77 00:04:53,896 --> 00:05:01,745 [Elena Reyes] FX Street published a piece making the case that the US can't default on debt this large and that financial repression is already under way. 78 00:05:02,196 --> 00:05:04,045 [Elena Reyes] I'd frame that a little more carefully: 79 00:05:04,495 --> 00:05:05,646 [Elena Reyes] it's less a certainty, 80 00:05:06,045 --> 00:05:08,495 [Elena Reyes] more a pattern that keeps repeating through history, 81 00:05:08,995 --> 00:05:11,446 [Elena Reyes] and some governments aren't waiting to test that theory. 82 00:05:11,963 --> 00:05:18,264 [Elena Reyes] Times of India reported that gold has now overtaken U.S. Treasuries as the world's largest reserve asset, 83 00:05:18,614 --> 00:05:24,213 [Elena Reyes] with India and China both trimming their U.S. Treasury holdings and building gold reserves instead. 84 00:05:24,814 --> 00:05:26,213 [Elena Reyes] Does that make sense as a signal? 85 00:05:26,713 --> 00:05:35,014 [Elena Reyes] Central banks aren't making a moral judgment about the dollar; they're weighing the same trade off households face-real returns against paper promises. 86 00:05:35,614 --> 00:05:36,614 [Elena Reyes] To put this in perspective, 87 00:05:36,963 --> 00:05:38,713 [Elena Reyes] none of this makes gold the fix. 88 00:05:38,483 --> 00:05:47,283 [Elena Reyes] Gold it's one asset people research precisely because it doesn't carry an interest rate that can be held below inflation-that's a structural difference, 89 00:05:47,483 --> 00:05:50,084 [Elena Reyes] not a guarantee-worth sitting with on your own. 90 00:05:50,483 --> 00:05:52,733 [Elena Reyes] If rates stay below inflation for years, 91 00:05:53,183 --> 00:05:56,283 [Elena Reyes] what's actually happening to the cash sitting in your savings account? 92 00:05:56,834 --> 00:05:59,483 [Elena Reyes] And speaking of rates moving prices in real time, 93 00:05:59,883 --> 00:06:04,183 [Elena Reyes] gold's move this week gives us a live look at that exact mechanic in action. 94 00:06:09,514 --> 00:06:14,713 [Elena Reyes] Building on that trade-off, let's look at what gold actually did this week. 95 00:06:14,814 --> 00:06:19,264 [Elena Reyes] Spot gold climbed more than 2% off Tuesday's two-week low, 96 00:06:19,414 --> 00:06:20,314 [Elena Reyes] CNBC reported. 97 00:06:20,514 --> 00:06:22,014 [Elena Reyes] That's a real move, 98 00:06:22,064 --> 00:06:22,814 [Elena Reyes] not noise. 99 00:06:28,755 --> 00:06:29,355 [Elena Reyes] Now, 100 00:06:29,555 --> 00:06:33,805 [Elena Reyes] shift from Washington's debt math to the buyers on the other side of that trade. 101 00:06:34,205 --> 00:06:36,905 [Elena Reyes] Who's actually stepping back from Treasuries right now? 102 00:06:37,405 --> 00:06:39,405 [Elena Reyes] The Times of India ran a piece on this, 103 00:06:39,605 --> 00:06:45,005 [Elena Reyes] and the number that jumped out at me was India's Treasury holdings down to a six year low. 104 00:06:45,605 --> 00:06:47,505 [Elena Reyes] China's cut its position substantially, 105 00:06:47,755 --> 00:06:47,955 [Elena Reyes] too. 106 00:06:48,505 --> 00:06:49,905 [Elena Reyes] So where's that money going? 107 00:06:50,505 --> 00:06:51,705 [Elena Reyes] Largely into gold. 108 00:06:52,155 --> 00:06:56,105 [Elena Reyes] The same article notes gold has actually surpassed U.S. Treasuries. 109 00:06:56,052 --> 00:06:58,802 [Elena Reyes] to become the world's largest reserve asset, 110 00:06:59,201 --> 00:07:00,002 [Elena Reyes] something bullion 111 00:07:00,101 --> 00:07:02,751 [Elena Reyes] Prices climbing over recent years helped drive. 112 00:07:03,551 --> 00:07:03,801 [Elena Reyes] Now, 113 00:07:03,951 --> 00:07:07,351 [Elena Reyes] before anyone reads that as a dollar exit slowdown, 114 00:07:07,801 --> 00:07:09,001 [Elena Reyes] this is diversification, 115 00:07:09,301 --> 00:07:14,651 [Elena Reyes] not abandonment. India and China still hold enormous dollar denominated assets. 116 00:07:15,201 --> 00:07:17,101 [Elena Reyes] Nobody's dumping the currency overnight. 117 00:07:17,751 --> 00:07:20,651 [Elena Reyes] But think about it from a central bank's chair for a second: 118 00:07:21,201 --> 00:07:27,701 [Elena Reyes] if you're managing reserves for a billion plus people and you're watching debt levels and financial repression debates 119 00:07:27,701 --> 00:07:28,201 [Speaker 2] heat up in the world's biggest economy or you are managing a trillion plus people and you're watching debt levels and financial repression debates 120 00:07:27,545 --> 00:07:30,145 [Elena Reyes] It's play out in the country whose bonds you're holding. 121 00:07:30,695 --> 00:07:31,295 [Elena Reyes] What do you do? 122 00:07:31,795 --> 00:07:32,345 [Elena Reyes] You hedge, 123 00:07:32,645 --> 00:07:33,145 [Elena Reyes] gradually, 124 00:07:33,445 --> 00:07:33,895 [Elena Reyes] quietly, 125 00:07:34,195 --> 00:07:34,895 [Elena Reyes] over years, 126 00:07:35,045 --> 00:07:35,695 [Elena Reyes] not headlines. 127 00:07:36,495 --> 00:07:39,445 [Elena Reyes] That's the piece connecting back to everything we've covered: 128 00:07:39,895 --> 00:07:40,345 [Elena Reyes] the debt, 129 00:07:40,595 --> 00:07:41,495 [Elena Reyes] the repression risk, 130 00:07:41,695 --> 00:07:42,545 [Elena Reyes] the reserve shift. 131 00:07:43,045 --> 00:07:47,095 [Elena Reyes] Sovereign buyers are managing the exact same tradeoff households are: 132 00:07:47,545 --> 00:07:49,895 [Elena Reyes] How much currency risk am I willing to hold, 133 00:07:50,395 --> 00:07:53,595 [Elena Reyes] and when the two largest emerging economies on Earth are b 134 00:07:53,595 --> 00:07:54,195 [Speaker 2] - 135 00:07:53,465 --> 00:07:59,365 [Elena Reyes] Are both trimming Treasuries while stacking gold? That's not noise; it's a trend worth watching, 136 00:07:59,615 --> 00:08:03,715 [Elena Reyes] even if it's moving at a diplomatic pace rather than a market crash pace. 137 00:08:04,415 --> 00:08:06,865 [Elena Reyes] Which brings us to the numbers that came out this week, 138 00:08:07,215 --> 00:08:11,815 [Elena Reyes] because the inflation and production data tell a story that ties all of this together. 139 00:08:17,771 --> 00:08:20,621 [Elena Reyes] Shifting to the numbers that got buried this week: 140 00:08:21,021 --> 00:08:21,921 [Elena Reyes] producer prices. 141 00:08:22,571 --> 00:08:27,921 [Elena Reyes] Lear Capital's rundown showed producer prices fell zero point three percent in June, 142 00:08:28,271 --> 00:08:31,621 [Elena Reyes] the biggest monthly drop since April of twenty twenty five. 143 00:08:32,171 --> 00:08:33,971 [Elena Reyes] May got revised down too, 144 00:08:34,321 --> 00:08:38,371 [Elena Reyes] from a one point one percent gain to just zero point six percent. 145 00:08:38,921 --> 00:08:42,321 [Elena Reyes] Wholesale energy and gasoline prices did most of the falling. 146 00:08:42,921 --> 00:08:44,771 [Elena Reyes] But zoom out to the annual number, 147 00:08:45,021 --> 00:08:46,621 [Elena Reyes] and PPI still ran 148 00:08:46,425 --> 00:08:50,025 [Elena Reyes] ran five point five per cent higher year over year. 149 00:08:50,525 --> 00:08:51,775 [Elena Reyes] Which read do you trust, 150 00:08:52,175 --> 00:08:54,475 [Elena Reyes] the monthly dip or the yearly trend? 151 00:08:55,125 --> 00:08:56,125 [Elena Reyes] Now there's a catch: 152 00:08:56,625 --> 00:09:02,125 [Elena Reyes] Lear Capital also flagged renewed US Iran tensions pushing oil back up, 153 00:09:02,425 --> 00:09:04,825 [Elena Reyes] right as June's progress showed in the data. 154 00:09:05,425 --> 00:09:06,725 [Elena Reyes] If oil keeps climbing, 155 00:09:07,025 --> 00:09:10,025 [Elena Reyes] does that cooler print survive into July's report? 156 00:09:10,575 --> 00:09:11,425 [Elena Reyes] An open question, 157 00:09:11,725 --> 00:09:12,575 [Elena Reyes] not a settled one. 158 00:09:12,953 --> 00:09:15,903 [Elena Reyes] The Fed meets July twenty eighth and twenty ninth, 159 00:09:16,253 --> 00:09:17,803 [Elena Reyes] and most expect a hold. 160 00:09:18,303 --> 00:09:22,403 [Elena Reyes] Softer inflation gives them room; rising oil takes it away. 161 00:09:23,103 --> 00:09:29,353 [Elena Reyes] Citi has put out a projection that gold could reach five thousand dollars within six to twelve months, 162 00:09:29,853 --> 00:09:31,153 [Elena Reyes] so here's what I'd watch, 163 00:09:31,403 --> 00:09:32,053 [Elena Reyes] not predict: 164 00:09:32,553 --> 00:09:35,053 [Elena Reyes] track oil and rate expectations together. 165 00:09:35,603 --> 00:09:39,153 [Elena Reyes] Don't lean on inflation data alone; it tells you where we've been. 166 00:09:39,429 --> 00:09:42,679 [Elena Reyes] not where debt and central bank buying take us next. 167 00:09:48,217 --> 00:09:49,917 [Elena Reyes] So where does that leave us? 168 00:09:50,317 --> 00:09:51,417 [Elena Reyes] Inflation cooled, 169 00:09:51,617 --> 00:09:52,467 [Elena Reyes] gold bounced, 170 00:09:52,767 --> 00:09:54,917 [Elena Reyes] but the bigger questions didn't go anywhere: 171 00:09:55,417 --> 00:09:56,067 [Elena Reyes] oil risk, 172 00:09:56,217 --> 00:09:57,967 [Elena Reyes] that $39 trillion in debt, 173 00:09:58,367 --> 00:10:04,367 [Elena Reyes] the reserve shift we talked about with India and China—none of that resolves in one soft CPI print. 174 00:10:05,067 --> 00:10:06,467 [Elena Reyes] Here's the honest takeaway: 175 00:10:07,067 --> 00:10:14,517 [Elena Reyes] nobody knows exactly how this plays out. What some Americans are doing is adding physical gold and silver into a diversified 176 00:10:14,457 --> 00:10:15,957 [Elena Reyes] apply long-term strategy. 177 00:10:16,557 --> 00:10:19,007 [Elena Reyes] Worth researching yourself before you decide anything. 178 00:10:19,657 --> 00:10:20,657 [Elena Reyes] If you found this useful, 179 00:10:20,907 --> 00:10:22,257 [Elena Reyes] subscribe and leave a review, 180 00:10:22,457 --> 00:10:23,807 [Elena Reyes] it genuinely helps the show. 181 00:10:24,357 --> 00:10:26,607 [Elena Reyes] To learn more about physical gold and silver, 182 00:10:26,807 --> 00:10:28,657 [Elena Reyes] or adding precious metals to an IRA, 183 00:10:29,307 --> 00:10:33,607 [Elena Reyes] text DOLLAR to four three three four three for your free investor kit. 184 00:10:34,007 --> 00:10:36,707 [Elena Reyes] That's DOLLAR to four three three four three. 185 00:10:37,207 --> 00:10:37,857 [Elena Reyes] Thanks for listening.