Jittery Stock Market Driving Safe-Haven Demand | Charlie Garcia: Explosive Silver Demand -

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up don’t miss this week’s Money Metals exclusive interview, this time with Charlie Garcia of R360 and a former advisor to six U.S. Presidents. Charlie gives the backstory on the well-covered topic of Chinese export restrictions on silver, and what it’s going to mean for silver prices.
Mike Maharrey and Mr. Garcia also weigh in on supply and demand fundamentals in silver and how expanding needs for the white metal coming from electric vehicles, weapon and defensive applications and an explosion in data centers are making the structural deficit situation look even worse for the silver market.
So, be sure to stick around for a wonderfully enlightening conversation about all that and more, and how to make sense of it all as a precious metals’ investor, coming up after this week’s market update. And if you enjoy this material, please do us a favor and like and subscribe to this podcast wherever you consume this content.
U.S. stock investors have been jittery in recent days due to new warnings about a possible bubble burst relating to AI and also private credit markets.
Swiss bank UBS recently published its worst-case scenario for defaults in the private credit sector, estimating that default rates could surge to 15 percent if AI triggers an “aggressive” disruption among corporate borrowers.
For background, private credit firms are primarily non-bank lenders, such as private equity, asset managers, and other specialty funds. These institutions lend money directly to companies, providing alternative funding options for companies and individuals.
When an economy becomes overleveraged, there is generally some spark that triggers a meltdown. In the late 1990s, it was the dot-com bubble. In 2008, it was the real estate bubble. Today, we have an AI bubble.
Some might question whether the AI sector constitutes a bubble. While it is debatable, there are some clear parallels to the dot-com era in the mid to late 1990s. At the time, billions of dollars flowed into internet startups just because they were internet startups. This was exacerbated by artificially low interest rates that incentivized risky borrowing. That bubble eventually popped. It was inevitable, because when you borrow billions without a viable business plan, you're likely to get into trouble.
We're seeing a similar mania in AI today. According to an MIT study, U.S. businesses have invested between $35 and $40 billion into AI projects, with 95 percent failing to generate any measurable return on investment.
UBS characterized “AI disruption” as a “clearer catalyst” for a credit meltdown.
And private lenders have significant exposure to potential problems in the AI sector.
The private credit market makes up a small percentage of lending, but there is always the risk of contagion, as we saw during the 2008 financial crisis. And there are massive levels of debt.
The upshot of all of this is there seems to be big trouble brewing and this will almost certainly lead to more volatility in markets, more uncertainty, and also likely — more Fed rate cuts.
Well before we get to this week’s interview let’s take a look at the trading action for the week in the metals.
Gold is up now about a little more than $100 or 2.2% to check in at $5,240 an ounce. Silver is soaring here late in the week and is up nearly $9 now or 10.4% since last Friday’s close to trade at $94.16 an ounce as of this Friday late morning recording.
As for the PGMs, platinum is experiencing similar success as silver. The industrial metal is up a little more than $200 or 9.3% on the week to trade at $2,371 an ounce. And finally, palladium is up a more modest 1.8% to trade at $1,794.
Well now, for more on silver and a whole lot more, let’s get right to this week’s exclusive interview.
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Mike Maharrey: Greetings, I'm Mike Maharrey, and I'm joined today by Charlie Garcia. He is the founder of R360, which is an organization I'm going to let him tell you about as we go through the interview. But beyond that, Charlie has an impressive resume. He's a decorated veteran. He served as an advisor to six presidents. He's a successful entrepreneur, and he writes a regular financial column on MarketWatch and publishes articles in other places. So Charlie, thank you so much for joining me today. How are you?
Charlie Garcia: Thank you for having me. I'm doing outstanding.
Mike Maharrey: Great. Well, I'm excited to talk to you. You came to my attention through an article that you wrote, I believe it was published by MarketWatch, about China and efforts that they're making to kind of lock up the silver market. And I'll just let you kind of explain in your own words what they're doing and what the significance of that is.
Charlie Garcia: Sure. So on January 1st, China had implemented a new export licensing regime, which basically controls all of the silver exports for the rest of the world. And when 60 to 70% of globally traded refined silver supply requires Beijing's permission to leave the country, that is a big problem. And of course, when that happened, you had the CME raised requirements on all the contracts and they started manipulating everything as they normally do. But unfortunately, precious metals really has never been controlled by normal supply and demand because of the huge paper markets and the manipulation that we all know of. But when all of a sudden you need silver for weapon system, for electric vehicles, for solar panels, for all the … It becomes a strategic asset, which is also becoming the United States under Trump. Now we're finally seeing the manipulation and in certain respects. And I've always said that silver's the most undervalued asset on the planet.
I've been accumulating it since the low 20s, and I'm a physical metal kind of guy. I don't trust the paper. And my kids have always made fun of me. And here I am going from Cambridge to Boulder, Colorado. And I have a thing to carry all my silver. And my kids made so much fun of me and my wife too, until all of a sudden it's like, oh my God, this silver thing actually has legs. So they're not laughing anymore.
Mike Maharrey: Yeah, I think that's true of a lot of people out there in the world. I've heard a number of commentators, and I agree with this assessment that what we're seeing right now, really, if you watch the silver market and this extreme volatility, the big price swings, we're really seeing this kind of battle playing out between the paper and the physical market. And would you agree with me that really, when you boil it all down, the fundamental issue with silver right now is there's just not enough metal. Would you agree with that assessment?
Charlie Garcia: Well, there's been a structural deficit now for five consecutive years and the cumulative drain since 2021 is approaching 800 million ounces, which is nearly a full year of global mine production is just kind of gone. And if you look at the industrial demand represents about 60% of total silver consumption up from about 50% a decade ago. So again, the biggest thing going on right now in the world is AI data centers. They need silver, EV, solar panel. People forget about the 5G infrastructure boom with phones. These aren't discretionary purchases. They're the backbone of the energy transition. And 70 to 80% of silver comes as a byproduct from copper, lead, zinc, and gold mining. And you can't just mine more silver because prices went up. You have to mine more of everything else first. And those decisions are driven completely different economics. And if you look at what's happening in China, 216 gigawatts of solar capacity in 2023, 277 gigawatts in 2024, they're building EVs faster than they can ship them and their industrial base inhales silver.
But again, when you have the central banks or JP Morgan or whoever snapping their fingers in the middle of the night and creating more paper silver and shorting, they've already been hit with billions of dollars of fines for what they do in the gold and silver market. When Platinum finally was let loose, it went into, I don't know, 1,200 bucks. And silver should be in the 200s and it will be there when this battle is finally won. And central banks have always manipulated precious metals because it makes them look bad that it showcases how they're debasing the currency. And in my view, they're debasing it if you look back 20 years by about 7% a year. And if you're not making more than 7% on your money, I mean your dollars, you're toast. And it's so fun. When my mom passed last July, I moved to Daytona to take care of her.
Her parents, my grandmother, collected all these silver quarters and dollars from 1965. And my sister went out and got them valued. And it's like, "Hey, this quarter from 1965 is now worth 16 bucks." Think about that. A quarter that was 90% silver is now worth $16. Well, the paper dollar from 1965 is worth 10 cents today.
And now my brothers insist like, "Well, should we go sell it now because the price is up?” So, I'm not selling anything. When it gets to $200, maybe I'll do something. I don't know. But why should you sell it? Nice thing about having physical, it's hard to sell. So it keeps those impulses away and it's easier to accumulate for the long haul.
Mike Maharrey: Yeah, that's a very good point. My wife's grandparents had a very similar thing. We were digging around in their attic about a year and a half ago and came across just a little like a burlap bag. And it was full of pre- 1965 quarters dimes and even some half dollars. And as you say, that little bag of quarters is worth a whole lot more than the face value of those quarters. And you make a really good point when you say that the currency debasement, you figured around 7%. That sounds like a pretty good number to me. And I think we should call attention to folks that that's far above the CPI that they keep trotting out. And maybe that the CPI is not the best inflation measure out there. Would you agree with that?
Charlie Garcia: Oh, of course. Because when you create more dollars and you're printing more dollars, more dollars means they're valued less. It's an inflationary asset, which is why I also own Bitcoin. I think Bitcoin, and I run my own node and I've owned Bitcoin for a long time, I think everybody should own Bitcoin gold and silver. They're not like this or the other, but Bitcoin is a deflationary asset because you can never print more. So when they're inflating assets, you want to hold hard assets and the hardest assets in the world are precious metals and Bitcoin. And again, I tell people, look, Bitcoin's going to be 10 million a coin in 20 years. Who cares if it's up or down in the next year or the next months? I don't buy it for that. I've given it to my kids. I've given it to my grandkids. And I say, look, I tell my kids, when you're in your 40s and Bitcoin's 10 to 20 million a coin, you're going to be worth 50 million bucks.
Charlie Garcia: All you got to do is just hold on it and look at the power of compounding. It's been compounding 60% a year for 15 years. Now I've predicted it's going to compound at 30% over the next 20 years, but hell, Warren Buffet compounds 20% a year and he's the best in the world. And I lost a bet with a friend of mine at Goldman about gold because unfortunately it was a five-year bet, but it ended at the end of 2024. If I would've had it ended at the end of 2025, then I would've won the bet easily.
Mike Maharrey: Yeah. You and I, I think are very similar in our thought processes. I'm not thinking about what's the price of gold going to be next week or even next year. I'm looking farther ahead. I'm trying to preserve my wealth in this environment, as you note, where our money is being devalued. On purpose, I might add, I mean, this is the stated price.
Charlie Garcia: Oh yeah. No, it's part of the strategy that they want to have 2% inflation, even though it's higher. It's like you got a pick pocket that's robbing you and they tell you and they meet all the time to tell you how much they're stealing from you. And one thing is you and me, but people that are living paycheck to paycheck who are poor and 20% of our company, our country lives in poverty, those are the ones that it affects the most because they're creating a wealth effect. If you look at that 7% debasement and you put it against a chart of the money printing and the S&P 500, it's a perfect match, perfect match. So you're looking at your 401k, your stocks, it's everything, it's going up. But if you look at what it purchases, I love this thing with like, we're talking about my grandparents, there was the Motel eight.
Well, back then for $8, you could spend the night at a Motel eight. Well, now it's like over a hundred bucks. Well, if everything costs more and is going up at that percentage on a yearly basis, it's all a figment of people's imagination.
They're barely keeping up. But if you have a stock portfolio, you have real estate or a home that you own, that's something. But if you are poor and you don't have those, that's what's creating all these problems and why we have a socialist mayor in New York City, the financial capital world.
Mike Maharrey: Yeah. Yeah, absolutely. Here's a question for you that you might have a little better insight than some folks with your background in the military and having a pretty good knowledge of the defense world. I think it's pretty intuitive that silver is an important component in defense. We have computers, we have missiles, we have all of these electronics, but people that I talk about, folks at the Silver Institute and places like that, they will readily acknowledge that silver is an important part of the defense industry, but nobody can seem to wrap their heads around how much silver. I'm not going to ask you to give me a number, but is it as substantial as I would assume that it is, or am I overstating in my head how important silver is to world defense?
Charlie Garcia: It is for weapon systems. It is for the AI systems. There's planes that have been deployed to the Middle East over the last week that have never been deployed in war before. And it has to do with jamming radar systems and in real time being able to do certain things. The reason that those B2 bombers went all the way from Missouri to Bomb and Iran, it's because we had certain systems that basically shut down all the radars. And in those systems, silver is a key component, which is why Trump and China have made silver part of a strategic asset now, which it never was before. And it's not only defense, listen to what Elon Musk and others that need it for their AI, for their EV. And the biggest problem with the AI infrastructure is going to be not only silver, but other metals that are very important.
And unfortunately, now China puts a choke hold on it, which is important because we can mess around with China with tariffs and other things, and they need soybeans for us, but we're going to need them for precious metals.
Mike Maharrey: We also need them to absorb our dollars, which I think is another issue that a lot of folks don't recognize. I mean, not just China, but the whole world.
Charlie Garcia: They've been selling treasuries on a net basis, and they have been on the verge for two years. I don't know exactly why they haven't done it yet. I thought they were going to do it last year – come out with their own currency backed by gold.
Mike Maharrey: Yeah. Yeah. I've seen murmurs about that as well, and also of course with the BRICS Nations. So, let me pivot a little bit here, and I want to talk a little bit about the Fed and Trump's appointment of Kevin Warsch, which kind of … I don't know that it was the only factor, but I think it did contribute to sparking the big stall off we saw in gold and silver because there's this perception that Kevin Warsh is relatively hawkish, he's in inflation, he's not going to let inflation run out of control. He wants to shrink the balance sheet. And of course, the first thing through my head is why would Trump pick somebody who seems to be at odds with what he stated that he wants, which is a lower interest rate environment? And you wrote an article about it, and I'm curious what your impression of Kevin Warsch is, because on the surface it doesn't make any sense.
Charlie Garcia: Look, it was between the two Kevins. And I came out with an article an hour after the announcement. So I had written two of them for MarketWatch, which was a pain in the butt, but they wanted two because first it was Hasset and then it went to Warsh. And the problem was that he needed somebody that could get confirmed quickly. And Warsh was the one that had the credibility to succeed Jerome Powell. He's 55 years old. He has what people call a triple threat resume. So, he served as an executive director at Morgan Stanley, which is, he was a top economic advisor to George Bush in the administration. He was the youngest ever Fed governor from 2006 to 2011. And when the crisis hit in 2008, he was the primary Fed liaison to Wall Street and basically represented the central bank at the time at the G20.
So come on, who in the Senate is going to argue against that resume? And he had that, and no one else that was in Trump's orbit had that, but it did surprise people because he's shifted. Warsh has historically been known as an inflation hawk, but now he argues the Fed should lower rates more aggressively. And intellectually, the way that he's coming at it is that he's contending and his theory, and I actually agree with it, is that AI-driven productivity gains will keep inflation in check. So, if you look at GDP, a big part of it is productivity, which has been going down, down, down, down. But now productivity could be pushing GDP past 5% in the last quarter. We'll see when the numbers come out, but Warsh has been openly critical of Powell's Fed data-dependent approach. He opposes the current operational framework, which is centered on models that give forward guidance, proposing instead that the Fed should stop forecasting interest rate paths and return to more of a results oriented model with a lot of discretionary power based on what actually happens.
But he still has to go through Senate confirmation, which is going to be messy no matter what.
We will see what happens, but analysts do expect rate cuts would still happen under Warsch, and they're expecting two cuts in 2026. They believe that's going to come closer to the end of the year, but we'll see. I mean, Trump just had a decision that came out against him at the Supreme Court to do with tariffs, and he spent a lot of time making appointments that he's now disappointed with. And the thing is, once you become Fed chair, the chances of you being fired are slim to none because of what it would do to the market and the perceived Fed independence. And I don't believe the Fed has been independent for 50 years, but nevertheless, the market, I think the reason it went down is like, oh, he's just saying what he's saying to make Trump happy to get the appointment, but then he's going to be there for a long time and who knows what he's going to do?
Is he going to be like one of the Supreme Court appointments that once they get confirmed are going to do what they believe is in their best interest as opposed to following what the president wants him to do. But the other thing about Warsh is he's very close to other people that have been around Wall Street for a very long time, like Stan Druckenmiller, and they talk all the time. He was in his family office, and he's been influenced by Stan. So you also have to look at what Stan is thinking and believing what he's doing in the marketplace. He's short long rates, he's long short rates, and he believes that no matter what the Fed is going to do, they're not going to be able to control the long rates because of all the printing and nobody wants to have a budget. I mean, the debt is just spiraling out of control.
And it doesn't matter if it's a Republican or a Democrat in office, it is spiraling out of control. Now, supposedly with stablecoins and supposedly with AI and productivity, they're going to be able to get it down. We shall see.
Mike Maharrey: Yeah. I'm skeptical.
I think you make a really good point that so often we all have our theories and our models and all of those things, but a lot of times realities tend to drive things much more than our theories. And as you mentioned, I mean, there's certain realities. There's a $38 trillion debt. There's a spending problem that nobody seems interested in getting under control. That requires borrowing, which requires, as you mentioned with Druckenmiller, the long end of the interest rate scale's really hard to control. So I think you make a really good point. It will be very interesting to see how all of this plays out. So before we wrap up, I do wanted to give you opportunity to just tell us a little bit about R360, because it sounds like a really interesting concept. And I know you're also doing some writing over on Substack, so you might want to tell folks about that as well.
Charlie Garcia: Yeah, thanks, Michael. So R360 is a community. I read Atlas Shrugged, and if you read Atlas Shrugged, who is John Galt? Well, John Galt was a guy that looked around and he saw what he called the looters were not letting people be entrepreneurial make money. And he wanted the entrepreneurial class to go on strike, let the wall fall apart, and then we'll build it up together again. I don't agree with that premise. What I believe is if we can aggregate 500, what I call superheroes in the US and abroad that have created a minimum of a hundred million in wealth, and that they've demonstrated the generosity of spirit to use that entrepreneurial spirit and their wealth for the benefit of others, for the benefit of humanity, that's what we're looking for. And although we've been called by three organizations, the most exclusive private members club in the world, because we have a membership committee that's denied 72 families, including nine billionaires.
And I tell people, it's not about how much money you have. We have 18 people that didn't go to college. We have 12 that didn't graduate from high school, half of the 12 are billionaires. So they're not pretentious. Many of the members are first time wealth creators. They've been scarred by poverty early on in life and something clicked that said, "I will never be poor." And now that they've created this great wealth, they want to use it to create a legacy, have children that will carry on that legacy and help others and use that capital in that way. I also started a Substack because MarketWatch is great, but I have an editor and I can only write 12, 1,300 words. And I try to entertain. I write with satire and a lot of dark humor. I make fun of the Pope. I make fun of everybody.
And when my mom was alive, I would read it to her. And if she had two or three laughs and I knew it was good, but if I read it and she didn't laugh, then I had to go back to the drawing board. It's called Capital Mischief. And on Mondays, nobody publishes five days a week that I've seen. So on Monday, I published something to do with the market. So today I published on a stock that I've been writing about for three years. When I started, it was $1.20, now it's 18 bucks, and that's Rolls-Royce. People think it's a car, but it's one of the biggest defense contractors in the world, our submarines have their engines, our airplanes, they're building small nuclear reactors now. It's an amazing company, amazing story. Then on Wednesday, I write about geopolitics. So two weeks ago, I said within 30 days, there's going to be a kinetic war in Iran led by the United States and Israel.
So, I used to work for a four-star general. I was an intelligence officer and I'm basically taking open source and writing like, "This is what's happening, this is what's moving, this is what you should pay attention to. " Then I have a podcast called Fortunate Fishes, and that comes on Friday. The fishes is because we believe wealth is more than money. It's not only financial capital, it's intellectual, social, human, emotional, and spiritual, which spells fishes. Jesus was a fisher of men, and we're looking for men and women that are willing to use their entrepreneurial spirit for … And I interview them long form. It'll be a two-hour interview. And then capital … I have the Mischief Library, which is Saturday. So I have 5,000 books in my library, and I'll cover three books, and if you read them, it's going to help you become successful and wealthy.
And then on Sunday, I get so many comments, and I'm fighting with people all week in the comment section that I have a Dear Charlie section, like a dear … It's not Dear Abbey.
People ask for advice in the markets, and today I published something, they asked me about Silver. And I started writing on Substack when Silver was 49, and then when it was 79, and I had the former head of the Girl Scouts called me because she bought it at 49, she saw my Substack article sold at 110 and did really well. And I'm not writing for people to make trading profits because I'm really writing for people to make generational wealth. So, I said I was going to publish five days a week, see what happens. I am a writer, and almost four months have gone by. I have 5,000 subscribers and growing quickly, and it's all free for probably another week, and then I'm going to turn on the paid. I have written about 110 posts. So I figured, let me give you three, four, 5X value before I ask you to subscribe.
I almost decided not to do it because I thought, oh, if all these people subscribe, now I have a job. If somebody's paying me a subscription, I got to actually write for a year, at least, or give their money back. But I enjoy it. I'm having fun, but it's hard to keep up with … A couple of my articles went viral, 400 comments, like how does one person answer 400 comments? And the nice thing is when you can't answer all the comments. So long days, my wife will be like, "Charlie, come to bed." And I say, "One more comment." So that's kind of what I've been up to. And it's capital mischief, and I write about mischief in the financial markets and in geopolitics.
Mike Maharrey: Well, that's outstanding. And I can say just from what I've read from you, you are a fantastic writer and it's coming from a writer. So I appreciate that. And I really like your worldview. I love what you're doing and I hope that you have a great deal of success with that. I appreciate you taking a little bit of time out of your day. I know you're a busy man. You probably have something that you need to be writing right now. So I appreciate that you've spent some time with me. Thank you, Michael. And we'll definitely have to keep in touch, and hopefully have you back on at some point as things come up that are worth discussing.
Charlie Garcia: Anytime!
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Enjoyed having Charlie Garcia on for the first time there and I trust you enjoyed that interview as I did. And that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast.
And to check out any of our audio programs, including our second podcast, the Money Metals Midweek Memo, just visit <a href="https://www.moneymetals.com/podcasts">MoneyMetals.com/podcasts</a> or find them wherever you listen to your favorite podcasts. And as a big help to us we would ask you to please like, subscribe, download and rate our podcasts. Doing so helps us extend the reach of this material.
Until next time, this has been Mike Gleason with <a href="https://www.moneymetals.com/">Money Metals Exchange</a>, thanks for listening and have a wonderful weekend everybody.

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