Brent Johnson: Updating the Dollar Milkshake Theory and $5000 Gold

Tom welcomes Brent Johnson of Santiago Capital back to the program to discuss his controversial "Dollar Milkshake Theory." The name for this theory comes from the concept of extracting oil from a neighboring property by "drilling" a longer straw. The United States has this magic straw and regularly uses it to suck up the world's capital. His theory's controversial idea is that US equities are going to go to all-time highs along with a stronger US dollar at the expense of most foreign currencies.



Brent believes there will be a pullback in equities around the election or early next year; his theory has yet to play out but will eventually, but he is prepared to be wrong. If the US provides dollars to the rest of the world, then his thesis will be invalid; however, he doesn't believe that will happen.



He explains why the world's monetary system does not have a reverse gear if it contracts or slows down, it breaks, and the system begins to collapse. That is why central banks have to re-collateralize the system regularly. They are just trying to keep the system afloat, as debt-based currency is being created, it's also being destroyed.



If you own gold or have US dollars, you will do well in the coming storm.



Time Stamp References:0:40 - The Milkshake Theory3:30 - Recent update, equities higer and timing.7:50 - Confidence and being open to being wrong.12:30 - Two different dollar markets - Eurodollars.15:30 - Betting with Peter Schiff.17:00 - New dollars vs. more dollars.20:00 - Why the Fed is printing dollars.22:30 - Currency swaps how they work.26:45 - Hedging in this environment.29:30 - Miners and foreign currencies.32:30 - Why people need dollars.35:00 - Alternative investments.



Talking Points From This Episode• The "Dollar Milkshake Theory."• The monetary system has not been fixed.• You want to have assets in physical gold or dollars.• How dollar swaps function bi-laterally.



Guest Links:Website: http://www.santiagocapital.com/Twitter: https://twitter.com/SantiagoAuFund



Brent Johnson brings over 19 years of experience in the financial markets to his position as CEO of Santiago Capital. He has been creating and managing comprehensive wealth management strategies for the personal portfolios of high-net-worth individuals and families since the late 1990s. The lack of an appropriate precious metals solution for his clients is what led him to create and launch the Santiago Gold Fund, LP in January 2012. Brent's views have been quoted in numerous print, online, and television outlets as a recognized expert in the gold community.



In addition to managing Santiago Capital, Brent is a Managing Director at Baker Avenue Asset Management. Before joining Baker Avenue, Brent spent nine years with Credit Suisse as vice president in their private client group. Before that, he was with Donaldson, Lufkin & Jenrette (DLJ) in New York City before moving within the firm to San Francisco. He joined Credit Suisse in the fall of 2000 when the bank purchased DLJ. Earlier in his career, Brent was a financial auditor for Philip Morris Management Company in New York City. In addition to performing audits at the company's headquarters, he worked on projects for Philip Morris subsidiaries in Germany, Hong Kong, and Richmond, Virginia.