Pricing Assets in Dollars is Destroying Your Wealth: An Interview with Takoa D Silva
Mike: So now I guess it's finally the West's turn—or in this case specifically the United States—that they have their turn, so to speak, of rapid currency devaluation and asset prices of all kinds just going up at different speeds and confusing people who haven't personally experienced that before.
Tobacco same thing, it is out or near a 60-year low in price. Gold, coconut oil same thing, very low historically speaking. Gold very low in price from the standpoint of an American and many other people around the world. It may not feel that way because wages and salaries have not kept pace with the speed of this devaluation that's occurred in the US dollar over time. They've not increased in the same proportion. So the labor that people have on offer is not tied to inflation unless they have a job that's tied to inflation some way.
They're using this type of perspective in their day-to-day lives in terms of storing purchasing power and things like jewelry, other physical commodities such as food, processed foods to store purchasing power, certainly real estate, as opposed to keeping money in the bank. So it's another testament to the fact that deficit spending is occurring year after year, currency values decline, and it just magnifies moves causing a person to think that the bull markets are actually much larger than they really are when measured against gold.
Mike: Welcome to another RTD interview. Today I'm excited to have first-time guest Mr. Takoa D Silva, an emerging market analyst, commentator, as well as a private investor. Takoa has spent over 10 years as a licensed and registered financial professional, managing roles as an analyst, high net worth services, as well as a portfolio manager. Today he joins us to share his thoughts on the recent market activity, the commodity cycle, as well as the role of gold and pricing commodities from a historical standpoint.
So Takoa, welcome to our RTD interviews.
Takoa D Silva: Hey Mike, pleasure to be with you. Thank you for having me on.
Mike: Yes sir, I appreciate you taking time to join us and as always looking forward to getting more of your thoughts and analysis. And you've done a great job of actually sharing some PowerPoint presentation with us here we're going to get to in a moment. But before I do that I want to definitely make sure that the audience is able to connect with you to find out more of your work that you do. So here we have your Twitter account or your X account, forgive me, and it's @TakoaDSilva and then also you do a great job on YouTube and so I see a recent interview with Rick Rule here and so they can also check you out on YouTube as well for more analysis. And so I'm looking forward to getting your thoughts.
So based upon all the things happening in the world, you know the whole idea of rethinking the dollar, I think more people as well as nations are doing that. And so from where you're seated now as an analyst as well as an investor yourself, what are some things that concern you as well as maybe one or two things that excite you as well about what you're seeing?
Takoa D Silva: Great question. And I think that you know the branding of your business Rethinking the Dollar is really pertinent and I think it really explains the things that have been on my mind in recent days because that's something that I've had to rethink. And we'll find out about that here in just a few minutes with some of these slides that we'll go over. But I've had to rethink how I look at the measuring stick of everything that I look at—goods, services, asset prices—how can you know the real price or the value of anything if the measuring stick or the ruler that you're using is constantly changing, in this case shrinking in size. It can distort the way something looks.
And so I know that your viewers as well as yourself keep a close eye on gold and so I've in recent days begun using gold quite a bit more often in terms of the measuring stick, comparing it against other things in order to get an idea of whether or not something is cheap or expensive. It's not the only metric to be used of course, there are others. Just like the idea of could a sports player be picked out of a lineup just by looking at the person's height and body weight—a lot of other metrics are required to be used in terms of assessing anything. But as one replacement in terms of using it instead of just US dollars I found to be very useful.
And then there are some other things that I find really exciting and interesting and I know that you do as well and probably the viewers do as well and that is the shifts that are occurring. The BRICS nations now today as well as the emerging and other markets as a whole—there are some really big changes going on. And the most exciting thing about it I think is the pricing differences between what things cost in the West and in particular in the US and then what things may cost in some of these other countries and in particular their asset markets. So that's what I've been thinking about and looking at most of these days.
Mike: Appreciate you for sharing that. So the measuring stick is crucial and I think here in the Western World especially all we've known is the privilege of having the world reserve currency, a.k.a. the dollar or Federal Reserve Note as I also like to make sure I distinguish. And so now that things are changing I think it's also a great time for people to begin measuring and reassessing I guess their entire financial outlook and in different metrics. And so we're going to definitely dive into gold and so the whole idea of gold over the last centuries has always been a constant anchor and a store of value and a measurement tool in of itself.
And so with the fiat I guess decoupling now gold has reached all-time highs in all currencies. And so I remember throughout the last couple years focusing on how gold was doing. Gold was performing well in other currencies based upon the activity within their nations and all the debt deficits and stuff that other nations are experiencing. So here we are in the US and it's happening to us now.
So real quick I guess based upon the recent all-time high of gold what is that a signal of in your estimates? Like what are some things that it has exposed that the people should definitely pay attention to if they haven't already?
Takoa D Silva: Something's happening with the currency and it's happening pretty quickly. It's happening at a faster speed. I'm a fairly young guy still, you know both are you know I'm fairly young but during my lifetime as sure as it has been the speed of the inflation now, the price inflation that I'm seeing around and the asset price inflation in the US—it's happening at a faster speed than I've ever seen before. And I'm just speaking specifically in reference to the mid-2020 period up until today which is about mid-2024.
Maybe this is on the low side but my estimate is that my personal cost of living and a lot of things that I look at on average like let's say 100 different goods, product, services, commodity prices—I think on average these things are up by about 50% from 2020 to 2024. And so I just did some napkin math and that translates in my mind into something like sort of a stealthy 35% devaluation in the dollar without it being formally announced, without anybody being given forewarning.
And I'm reminded of looking at some of these foreign markets, other countries like Africa. A recent example that I looked at was Kazakhstan. When you're looking at stocks in some of these other countries the price may have gone sideways or up 50% or it may have doubled over a five or eight year period but when looking at it the person thinks to themselves well wait a second what has the currency done during that same time frame? Because sometimes the currency relative to the dollar or relative to gold priced in that foreign currency may have gone up four, five or six times. But if the price of a particular stock or let's say a piece of real estate as an example only went up 50% or only doubled it actually means it's declining in price in real terms when you measure it against gold.
So now I guess it's finally the West's turn or specifically in this case the United States to have their turn so to speak of rapid currency devaluation and asset prices of all kinds just going up at different speeds and kind of confusing people who haven't personally experienced that before.
Mike: Now if the measuring stick or the barometer, the determining factor for the value of an item and of itself is transitioned out of USD terms internationally speaking at some point and gold comes back into the equation whether done by the BRICS or any other unions that are forming out there. I guess I try to wrap my mind around the concept of like how do we then begin placing value on things? Do we use metric or do we use ounces or ounce as a measuring barometer on a broader landscape or perhaps grams? And I'm also referring to how I think it was in 2022 when the whole Russia Ukraine conflict kicked off and the Russian Central Bank opened up I guess the acquisition of gold and somehow linking it to the barrel of oil so one gram was one barrel. So we talked about that forever but in your estimates how could people begin measuring value in ounces, grams or what are just some hypothetical ways that people can look at this?
Takoa D Silva: Well I guess it's up to each person to decide for themselves. If you used a full gold ounce as opposed to a single gram the numbers might be skewed a little bit. If you like let's say as an example took the price of a 5 pound bag of organic flour because the price for that has probably gone up more than non-organic over time and you put together the prices over let's say a 20-year period and you plotted it on a chart, if you used an ounce of gold or if you used a gram of gold the display, the characteristic of the chart would probably look identical but the numbers, the ratio numbers would look different.
As an example if the 5lb bag of flour costs about $6.50 US and you divide that into let's say the gold price of about 2351 an ounce your fractional numbers are going to be sort of they might look a little bit confusing whereas if you took a full gold ounce at 2351 divided it into grams believe it's 31.1 per troy ounce and then use that as your figure to compare let's say the price of flour or the price of a car wash or something like that just to make a random example your numbers from a fractional standpoint would appear much smaller so it might be a little bit more digestible for your eyes or easy on your eyes in terms of looking at.
Mike: Great analysis there, great assessment there. And so moving forward gold is back into the equation clearly and so I remember doing some interviews in the past where a lot of mining experts as well as exploration companies were hinting at commodity super cycle and they were saying any minute when gold is going to break and it's going to really reveal to the world what's real and what's not.
And so I guess at this current moment with gold at all-time highs priced in fiats we're officially in a commodity cycle or a gold cycle with the commodities referring to other metals and assets soon to follow or what are you thinking?
Takoa D Silva: Gosh what a good question and it's tough to say. How do you define a super cycle? I know there's a technical definition for it that's available on Google but one way to achieve I guess a quote unquote super cycle could be a single round or a multiple round devaluation of currencies possibly led by the US dollar and that could produce enormous moves nominally speaking in many commodities, precious metals included, that could appear to most people as what they would describe as a super cycle. But would that actually translate into more consumption of various commodities and more actual economic activity in terms of construction and building and trade and so forth? That it might not necessarily translate into that but certainly nominally speaking it could turn into some serious fireworks for sure.
Mike: Alright now I'm curious now I'm ready to dive into the presentation. So for those who are tuned in part of what excites me to have you on is the work that you've done and work you've presented for us where this is my first type of master class type of I guess discussion where you're going to walk us through some things that really paints a very unique case that I haven't seen on the internet as of yet. So thank you for putting together for us and as I transition over I'll let you get behind the driving wheel and kind of lead us into your investigative work in this deep dive here that you have for us. So I guess have at it.
Takoa D Silva: Sure thanks Mike. So I'm not holding myself out to be an expert or claiming to be an expert or knowing anything more than anybody else. I just reached a point where I thought as we discussed with regard to not having a reliable ruler to measure things against I wanted something reliable durable to measure asset prices and commodity prices specifically against just to get a firm view of what I was seeing around me in terms of the increasing commodity prices. So I put together this information really just for myself. And so I've got the slides here and we'll get into them now.
But I should point out the second item here is just an important disclaimer that this information is just for educational informational purposes. Nobody should make an investment decision based on this information. You should always consult with a qualified financial advisor before making any financial decisions.
But the first slide here is just the very interesting chart that your viewers are already familiar with likely which is just the gold price priced in US dollars from about 1960 to today in 2024 or until May 2024. This shows the price of gold moving up from $35.20 an ounce based on the World Bank figures to today's price of $2,351 an ounce roughly. This is dated as of an earlier day in May but this translates into a 67 fold move for the price of gold or 6,700% increase.
So any asset price like let's just say a commodity that doesn't keep pace with the price of gold technically speaking becomes cheaper over time or any commodity that outpaces the price of gold in terms of its US dollar price increase could be said as becoming more expensive relative to gold over time.
And so this gold chart of course is interesting but what I did for I guess for my own entertainment purposes is I flipped the chart over and I priced US dollars priced in gold. And when you flip it over I just found it to be very interesting. It reminds me of those silver content charts of the Roman denarius. As the silver content of the coinage plunged over time the purchasing power plunged as well. And while their charts were charted over like a 200 year period this still is from about 1960 to 2024 but it basically shows that from around 1960 you could buy a single full ounce of gold for $35.20 and today roughly you can buy 0.015 ounce of gold for that same $35.20. So roughly speaking that implies loss of purchasing power of US dollars priced in gold, the loss of purchasing power of about 98.5%.
And each of those major plunges down that you see on this chart is basically the nominal all-time high price for those three periods which was in 1980 about $850 an ounce, 2011 was about $1,920 an ounce and 2024 so far I believe it's $2,449 an ounce that we've seen as the price. So this just basically showing how the dollar the purchasing power is just becoming smaller and smaller over time.
And so what I found to be very interesting was plotting with these World Bank figures the prices of various commodities against gold, pricing them in gold in other words and just using a gold ounce as opposed to a gold gram. And I went down this big list and I'll just flip through these very quickly Mike and please stop me at any time.
But the first one here is Australian coal. When I look at this 60-year price chart this is priced in gold. It doesn't look like it's at the upper right hand corner of the chart like a lot of other asset price US dollar denominated asset price charts are showing. This is in the bottom right hand corner. It's near its bottom trend that it's displayed over the last let's see about 30 years. And so what I did for a number of these charts was I took their peak, the peak pricing that was demonstrated compared to gold over the last 60 years and in this case the peak was in 1981. It was a ratio of 1.1448 a metric ton of Australian coal compared to an ounce of gold. And this chart tells me that priced in gold Australian coal along with many other commodities as these other charts will show is pretty cheap. And it would have to move up at about two or threefold in order to reach that same peak that was demonstrated in 1981.
So going through this list: Brent crude it's also not anywhere near its all-time high over the last 60 years as demonstrated against gold which was in 2008. It's toward the lower end of its range. Uranium same thing priced in gold it is nowhere near its 2007 peak.
If we go to the price of uranium on the right hand side of the chart this is just denominated in US dollars at $136.22 a pound that was the nominal price shown in 2007 but right now it's priced at about $91.75 cents a pound. It looks a bit more dramatic than if we flip back one page and we look at it from the perspective of gold. It looks sort of subtle this recent move that we've seen. And if you were to price it again using a peak price as demonstrated against gold in 2007 it would require a move greater than fivefold from here priced in gold in order for it to reach or exceed that prior peak in 2007.
And uranium as our uranium buffs or history students watching this will know demonstrated higher peak pricing in earlier years measured against gold. But going right down this list natural gas same thing it is very cheap historically speaking relative to gold. It would take an enormous move priced in gold to revisit its 2000 the year 2000 peak.
Platinum same thing. Our platinum viewers our students of platinum will and probably yourself too Mike I think will recall that priced against gold platinum is at something near a 100-year extreme. It doesn't mean that it has to be reversed but it's just it's very interesting to look at in gold terms.
Silver it is in the lower portion of its trading range as well and our precious metal students will certainly be familiar with the silver to gold ratio history as well.
Zinc bottom range of its history priced in gold same thing with lead same thing with tin despite the recent move in tin it's at the bottom of that range same thing with nickel copper as well despite recent copper's recent move the ratio peak that demonstrated in 1966 was far higher about 54.2 to 1 as a ratio against an ounce of gold. That would require from here to revisit or exceed that 1966 peak measured against gold it would require a move in copper greater than 12 times. Will that happen? I've got no clue I'm not calling for that or suggesting but it's just an observation.
Aluminum same thing as the other base metals. The industrial commodities are quite low measured in gold. Iron ore same thing. Potash is at the bottom of its range as well. Corn as along with the other agricultural commodities are very cheap when measured in gold looked at at a historical basis over the last 60 years. Same thing with soybeans wheat cotton oats rapeseed oil. Cocoa as well despite cocoa's recent move that has garnered the attention of the corporate mainstream press they've been circulating articles about cocoa being in a bull market but when we look at it priced in gold the recent move as seen in this nominal chart of cocoa priced in nominal US dollars this recent move looks really impressive it looks to be far larger than the move that was shown in 1977 I believe the prior peak about $4.25 a kilogram but once again when we flip back and we look at it from the perspective of gold the recent move is a tiny blip on the right hand side of the chart. When measured against gold you would need to probably move up more than about ninefold from here to reach or exceed its 1977 peak as measured in gold. So it's very interesting to think about how the currency devaluation or the loss of the purchasing power of the currency is really distorting the way things look and how things are described certainly by the popular mainstream press.
Coffee same thing bottom of its range it looks very cheap very available pricewise when priced in gold. Tea pulling pricing from three auctions in Colombo Kolkata and Mombasa shows just a wonderfully cheap and abundant tea market in terms of its price when priced in gold. Thai rice same thing absolutely cheap abundant commodity when priced in gold. Here it's just probably near its cheapest point that it's been in 60 years. Sugar same thing bananas same thing oranges have had a recent nominal US dollar increase in price as shown on another chart which I did include in this presentation but the recent move in the bottom right hand corner of this slide shows sort of a mild move when priced in gold the prices of oranges in terms of a kilogram priced against gold to reach or exceed its 1970 peak measured against gold we need to move up more than eightfold from here not saying that it will or that it could or that it should but it's just an observation.
Beef same thing at the bottom of its 60-year trend for chicken same thing very cheap very available historically speaking when looked at the price of gold. Milk same thing as well it is near or at a record low as far as this data that I was able to pull from the USDA World Bank. Palm oil a commodity produced in Southeast Asia wonderful commodity used for food and lots of other things wonderfully cheap as well when priced in gold. Tobacco same thing it is out or near a 60-year low in price when measured in gold. Coconut oil same thing very low historically speaking measured in gold. Rubber near historic lows as well when priced in gold. Malaysian logs at or near a 60-year record low when priced in gold measuring a cubic meter. When looking back at the 1993 peak when measured against gold would require if Malaysian logs were to revisit or exceed that peak would require a move over 17 fold from here in order to revisit that peak.
So as those charts described Mike commodity prices when compared against gold are historically still very cheap from the standpoint of an American and many other people around the world it may not feel that way because wages and salaries have not kept pace with the speed of this devaluation that's occurred in the US dollar over time. They've not increased in the same proportion so the labor that people have on offer is not tied to inflation unless they have a job that has that's tied to inflation some way. They're using this type of perspective in their day-to-day lives in terms of storing purchasing power and things like jewelry other physical commodities such as food processed foods to store purchasing power certainly real estate as opposed to keeping money in the bank. So it's another testament to the fact that deficit spending is occurring year after year currency values decline and it just magnifies moves causing a person to think that the bull markets are actually much larger than they really are when measured against gold. So those things have been I think shocking and I don't know if exciting is the right word to use but certainly concerning.
Mike: Wow. Just three or four items three or four angles there that you presented to us that really should get anybody to think because we're all on the same boat ultimately speaking. The remainder of this decade here we're going to probably witness some things that we couldn't have ever imagined whether it be geopolitical events we have the presidential season coming up and all the things to do with that we didn't really dive into but that definitely plays a major role in how things are how our financial affairs are conducted in this country and then the practical sound investment strategy now need to be restructured just because the 60/40 model that has been preached forever no longer carries the same value. And so that's something I'm sure you have some thoughts on as well but we're approaching an hour and I know you still have some slides to share with us but I figure we'll give a tease or a sample or a taste to the viewers to digest this because definitely you have to go back and rewatch this and really understand the magnitude of what you shared with us.
But hopefully I have you back on in the future and dive even deeper because I of course I nerd out over things like these as well just because I mean how could you not be concerned with things being done around you that impact your life and when you see the manipulation of assets and different categories occur because of the currency it just really should make people rethink some things. So let me just share with the people once again where they can find you at. Here you are on x.com go take a look and subscribe as well as on YouTube. Yeah that'd be a great way to follow you or what not. Any other places you want to point them or give the viewers a sample as to what they can expect when they connect with you?
Takoa D Silva: Well yeah they can chat to me on those social media channels. I don't really have anything for sale but they can friend me on there or send me a message or something like that. Be happy to befriend anybody.
And so for those who are plugged in and enjoyed the demonstration here I'll actually put the link down to the PDF format so they can grab a hold of all those charts you put together so they can plug in. So once again thanks for putting that together and of course thanks for joining us on RTD interviews.
Takoa D Silva: Hey Mike it was a pleasure to be with you and I have to quickly just mention that Rethinking the Dollar is on my daily read list. So for anybody watching make sure to subscribe to Mike's channels he puts out just spectacular work and sign up for his email list. I think as you mentioned the slides are going to be available underneath this video. But hey thank you very much for having me on it was very nice to speak with you and your audience.
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