355: Should You Buy Gold?

Buck: Welcome back to your show every Wednesday. My guest on Wealth Formula podcast is Charles Goyette. He’s the New York Times best-selling author and radio personality. And he’s known for his outspoken libertarian views and his economic commentary. He’s also the author of The Dollar Meltdown on Red and Blue and Broke All Over. And he’s also the author of The Last Gold Rush Ever. Welcome to Wealth Formula podcast, Charles.

Charles: It’s great to speak with you and thank you for having me on.

Buck: Yeah, it’s wonderful. Be fun to listen to your show as well, But I’d love to, you know, kind of pick your brain on what’s going on these days. You know, obviously, your background and your interest is a belief in gold and sort of the negative impact that the Federal Reserve is having on the dollar. Can you talk a little bit about maybe just a historical perspective, the performer is of, you know, fiat currencies in general, maybe the U.S. dollar in particular versus gold?

Charles: I’d be very happy to do that. And my interest as well as besides all the brutal time that I have to keep an eye on the Federal Reserve is up to interested in Austrian economics, the economics of prosperity and free people as well. And unfortunately, we’re not living in an economy of Austrian economics or an economy of free-market capitalism.

I mean, the economy has boomed and blustered and blustered and boomed over and over again by the Federal Reserve and its monetary policy. And the result of that, we have to spend an inordinate amount of time watching what they are up to. So when we say that the dollar is a fiat currency, people is what is fiat money?

And I finally, after talking about this, like really for 20, 30, 40 years or whatever it’s been. I saw a great example to illuminate what Fiat actually means. So in the Old Testament, there’s a line that everybody of every faith knows in which God creates the world. And he says, Let there be light. But if you read it in Latin, it goes Fiat Lux. It’s a decree or a command that there be light God. And so when you say fiat currency, you’re talking about a currency that has no innate.

Buck: Let there be currency.

Charles: Its value is the fact that somebody in a high place has said, look, this be money. Yeah. And it may have value for a while. The order from on high for you to use it as money may last for a while. But somebody asked me back one day how many fiat currencies or paper currencies have collapsed throughout history. I don’t know the answer, but my smart aleck answer is all of them. Yeah. Ones that haven’t collapsed yet are well on their way. Yeah.

Buck: Yeah. So to talk a little bit about like the Fed policy in particular right now, and I should point out to you, like I share, you know, something in common generally libertarian views. My concern is, you know, neither party really holds true to the libertarian values when it comes to the economy. And then now you have the Fed playing a role in that as well. And obviously they’re politically motivated. So how does this all kind of come together?

Charles: Yeah, that’s that’s a great entree for me because, you know, the Fed persists in Republican administrations and Democratic administrations with essentially the same policy. I mean, you know, Alan Greenspan was a reporter who was appointed by Reagan. Right. Was reappointed by Clinton, was reappointed by Bush, and so on and so forth. It’s the same, you know, with their own Powell, who was appointed by, I believe, Barack Obama and then reappointed by Donald Trump and so on. But whatever it is, the names change, but the policy remains the same under Democratic and Republican administrations. And, you know, it’s kind of like what’s going on on the international stage. You know, we read that central banks around the world are moving their reserves, their dollar reserves out of dollars and into gold. And the reason, of course, is kind of self-evident that they know exactly you know, they’re all central bankers.

If you read in read you know, a paper by a senior Chinese central bank official, it reads like somebody that’s a Keynesian from the Fed. They all say the same things, but the reason that they’re moving their classes out of their dollar reserves and then to gold is because they know how the game works. So they don’t mind fleecing their own people with their own fiat money. They just don’t want to be victimized. They don’t want to be policed by us. So this is the way that Republicans, the Democrats are internally in the microcosm of the United States. You know, the Republicans, you know, don’t want policies that, you know, subsidize the cronies and the contributors of the Democrats. And then when they get in power, of course, they want policies that subsidize the cronies. So it just goes on forever. And it’s always ended very badly.

Buck: You know, when you think about investing or investing in gold, buying gold, do you think about it as largely a wealth preservation tool or a wealth-building tool?

Charles: So I think that is fair to kind of apply both terms to it. It’s certainly wealth preservation through the ages, through the centuries around the world. It’s the enduring currency, it’s the enduring wealth preservation tool of the world. But, you know, what happens in times in which faith is lost and the central banks and their ability to manage affairs in times when we have high inflation like we’ve had in the United States, then gold and silver to begin to outpace the performance. So if the money is depreciating at 8% a year, don’t worry for a minute that gold’s only going to go up 8% that year because it tends to, you know, markets are forward-looking and so they watch what the Fed is doing. And so markets tend to move faster. So their profit, the profit opportunities in gold and silver in addition to the wealth preservation. So I think you’ve got a foot in both camps.

Buck: Do you make a distinction between gold stocks versus physical gold?

Charles: Yeah, I do. And it’s a very, very important one. And this depends on the investor’s psychology. If you think that things will go along more or less as they have been if you believe that the monetary system is stable and it’s more or less intact. And yes, they may print $10 trillion over the course of a few years and the value of the dollar, but everything’s going to be fine.

So you think there’s some underlying stability or reliability to the monetary system as presently constituted, then you think, well, I can offset the inflation. I could do very well with gold stocks. But if you have you don’t have to be apocalyptic. But if you think that there’s some rough road ahead and I am here to persuade anybody that there is, that there is. But if you think there are some rough road ahead for the United States economy, for the US dollar, then all of a sudden it becomes much, much more important to have physical gold. Does it do you a lot of good to have gold that you can’t get your hands on? And this happens all over the world. And it happened shamefully here in the United States in the 1930s when monetary gold was nationalized, the U.S. government made it a criminal offense to hold monetary gold punishable by ten years in jail and $10,000 fine.

So if you think that things are going to be stable more or less, and prices may go up and they may inflate, and you want to stay even with inflation or get a little ahead with gold stocks at the wonderful. It’s a wonderful idea, but it is not the kind of thing that you want to do if you think that you’re going to be some real turmoil here.

Buck: So underlying the thesis on gold ultimately is, you know, pretty common, the consensus being that the dollar’s weak is going to continue to get weak. The spending that we’re doing is, you know, making the dollar weak. The government is or the Fed is is continuing to print money and that’s making it. But let’s let’s just say, okay, so gold is one alternative, but another way to approach that would be, well, wouldn’t any physical asset, for example, real estate, wouldn’t that hold the same benefit, say you’re holding real estate? Presumably the value of that real estate is going up as well because of inflation and the weak dollar and all that. So can you make a distinction for me between the, you know, owning gold and owning real estate or if, you know, if if in your mind, it’s it’s all kind of the same?

Charles: Well, they’re not the same. And I wouldn’t say anything to slam real estate. My wife is a highly accomplished real estate agent of 32 years. So, yeah, sure, part of our family life. But I will tell you that you have people looking at it and all understand in a way that they might have forgotten that real estate is very, very interest rate sensitive. It’s hugely important to the environment of rising interest rates. But the question in difficult times, depending on how things play out, is the question of liquidity. And gold is the most liquid asset in the world. There is always a market for it. I saw a National Geographic special years ago in which they caught some people in deep in the Amazon, uneducated, illiterate, but they were panning for gold deep in the Amazon.

00:15:18:04 – 00:15:41:19

Charles:

And when the camera crew and the producers, you know, asked if they sell them some of the gold, they knew instantly what the London fixing goal was that the price was, even though they had no radio, no communications or anything. So gold is highly liquid around the world and there doesn’t have to be a coincidence of what’s in gold like there does in real estate.

If you have for me a wonderful property that I adore in Montecito that I would very much like to have, but my wants are for something else. I can’t take it and then hope to sell it instantly overnight to somebody else. Now, if I were practicing in that market, maybe. Maybe I could. But I guess the point I’m making is that people hold gold not because they want to consume it or use it or hold it forever, but it is instantly liquid to the next person. So no matter what it is that they seek to acquire or what they need in a crisis, gold is premium liquidity.

Buck: From a practical standpoint, I’m just curious and you know, I don’t carry a lot of gold, but say you wanted to have a couple of hundred thousand dollars in gold, million dollars in gold or whatever. I mean, how difficult is it to, you know, store it? And where do you store it?Are there places that don’t charge you an arm and a leg, but still, you know, provide you the ability to store that gold?

Charles: Well, you have to be kind of cautious here. I’m very glad you asked me that part, because, first of all, the banks are displaying growing hostility to gold and even in your personal safe safety deposit box, they don’t really want it. I won’t name banks by name, but they are their hostility while they see a lot of money coming out of the banks and going into gold. They like that very much. But there are other pitfalls. For example, there’s a set of a well-known story, some of the details alluded me, but in in Beverly Hills and over the last couple of years in a non-bank depository, those non-bank depository because it was the Beverly Hills people not only had their personal papers in effects there, you know, show biz people had their jewelry that they wear on Oscar night and so on, so forth.

But it had nothing to do with the bank. So it didn’t come under the banking laws, but the FBI got on to somebody. I don’t know whether it was a terrorist or money launderer or drug dealer or whatever. It was one account holder with a box in that bank and they cut down the whole bank.

So hundreds of people were denied access to their wealth, to their papers, to their effects, while the entire bank was cordoned off. And as I recall, it took them litigating for years to get finally get access to their own property, even though it was it wasn’t a bank and it wasn’t under the authority of the FDIC or any other federal banking institutions.

So the answer is that Wall does do a lot more good when you can get your hands on it in a crisis. And the crisis may or may not mean a bank closes or a cascade of banks closing for a short period of time, which certainly has happened in our history. So a somebody like myself that talks to people about owning gold, I get this question a lot. What you do with it, you don’t ever insist. Don’t tell me. I don’t want to know.

Buck:

Yeah. I read it somewhere in your plant planters or something like that. So, you know, in recent years that we’ve got the advent of something that has some of the qualities of gold, it might be a little bit more mobile and that’s cryptocurrency, particularly Bitcoin. Love to get your thoughts on that because if you look at, you know, I think the younger generations and stuff, they really have a tremendous amount of faith in Bitcoin to the extent that it may rival that of gold, they prefer Bitcoin over gold. Can you talk a little bit about what you see? The role of Bitcoin is? And I’m going to stick to Bitcoin because the rest is the rest. I don’t really, you know, like I don’t I don’t know what’s going on with the rest, but Bitcoin has a clear in my mind some role going on in the future here.

Charles: Yes. So I am a bitcoin owner, but only because my younger son. That’s your demographic description and certainly bitcoin for my birthday. Other than that, I don’t own it. I’ve been approached to deal in it and stuff. Going back to the very beginning and I’ve always taken this. This is Nobel Prize winner Friedrich Hayek’s idea that, you know, let the competing currencies evolve and see what people want people to think for themselves. And so I’m always happy to see something competing with the dollar and alternatives to the US dollar, which I feel is criminal in mismanage. And Bitcoin may or may not turn out over the long haul to be the perfect or the best possible alternative, better even perhaps than gold. I don’t see it that way. I think the world’s track record kind of trumps the comparison, but I am happy to see people experiment with it and develop alternatives, and I’m especially happy that they’re doing it with their money and not mine. Go ahead. Let’s see what you can come up with and what works over the long haul. For the time being, I think that world’s track record is just unparalleled.

Buck: Yeah. So you I believe you have kind of suggested that you think that there’s, you know, ultimately a government plan to eliminate cash. Is that related to the, you know, central bank? Yeah. Decentralized currencies and that kind of thing.

Charles: Now buckets. And I think it’s a very it’s a very unhappy development for for all of us. It and they are working on it laboriously burning the midnight oil at the Marriner Eccles building in Washington. They’ve got 100 PhDs at the very least working on this all the time of the development of the central bank digital currency. President Biden’s staff posted it on the White House website a couple of months ago that this is President Biden’s priority for us.

Then, of course, who knows more about monetary policy than President Biden? So they’re working pell mell on this thing. And there’s a problem with this. And the problem is that everything becomes open to surveillance. You have no liberty, no freedom of movement that is not surveilled. It’s a very, very negative thing in China. They call it social credit system.

So if you do something that makes yourself, if you can found or you oppose the conventional wisdom, whatever it may be that emanates from the state, if I don’t speak out rudely at a school board meeting or you demonstrate somewhere that you perhaps shouldn’t or whatever it may be, you find your social credit score goes down and all of a sudden you can’t buy an airplane ticket or you get credit or you can’t buy a house or you can’t get you know, you can’t do this and that. And so it’s used this massive surveillance power that is intrinsic to a central bank. Digital currency is used like virtually everything the government does is used as a tool of control and and enforcing social social conformity, I think, is a very, very bad development. It can virtually screams for people to get themselves, get some of their assets off the grid, the central grid and something like coal.

Buck:

Yeah. And what’s interesting too, about that is, well, there’s a couple of things. One is obviously I can see the government wanting to have surveillance of all all money for taxation purposes, right? I mean, that’s that’s probably part of it. I wonder, though, if they’re I mean, the probably will have some required legislative process to get that through. And I wonder if there is this social, you know, the political willpower, because I would think that people in general, they would see confiscation of cash or like the elimination of cash as a something that’s, you know, against their civil liberties.

Charles: All you do and I do. And I think people that are educated and understand the implications will get it. But I’m not sure that we have a were enough of numbers to control the debate or the outcome and we could to be relegated to a marginal complainers about it. You know, we still to this day, most of the American people, you know, basically think that, you know, that money, that greenbacks, for example, what gives them value. They think it’s similar to the idea that well, they think that, you know, it’s like milk and eggs. They come from Safeway. Right. They don’t understand the whole messy business about farming, the background. That’s the same with the money. They don’t really think they’re not interested in the pre suppositions of what gives this paper money value and so on.

And so when something like a central bank digital currency develops, they will hear some people squawking about it on talk radio shows or whatever it may be, or, you know, occasional blog posts somewhere and yet really not understand the full implications of it. But we’re at the point now where, you know, the government is virtually won the war on cash. It’s undeclared, some legislative, it wasn’t debated, but hash represents to a degree of anonymity and the government was very happy about that. And they you know, they because the repress the use of cash, it’s always been because of, you know, drug dealers or terrorists or terrorists, the drug dealers keep on doing business just fine, thank you very much.

But, you know, the American people can be criminalized for using cash in the most innocent way. And so, you know, there is reporting requirement and it’s not people in the gold business that’s usually selling used automobiles. But if somebody comes to you with $10,000 or more in cash, the seller is required to file a report with the Treasury Department.

You take 10,000 or more out of the bank with cash, put 10,000 or more dollars in the bank, in cash. They’re required to put a lot of paperwork on you, but it’s even worse than that. But if somebody comes in with, let’s say, arbitrarily $9,950 in cash, you have to wonder if they’re not specifically trying to evade the reporting requirements. And the government has a new report called Suspicious Persons Report. And the person at the bank or the used bar dealer or whoever it may be supposed to, you know, begin acting like law enforcement. Allow this person may be trying to evade the reporting requirements. And now they’re challenged. They are burdened with having to fill out another report, deeming them a subscription person that needs to be inquired about and stuff.

So they’ve won the war on cash already and people didn’t squawk and didn’t stop it. And so central bank, digital currency, I like to think I hope you are right there. We are not the numbers are the people are native educated that, you know, maybe we can dig in our heels and stop it. But why it’s moving.

It’s moving, moving very, very fast. You know, I did a conversation with a really well-known financial author one day, and he said, well, you know, when the fiat dollar with the Federal Reserve’s dollar finally breaks down, the United States is prepared to replace it with the International Monetary Fund’s special drawing. Right? Yeah. I said, you must be kidding. You mean the people in the United States of America have been victimized by the failure of the dollar, managed by Central bankers in Washington, the Federal Reserve dollar, But they’re automatically going to be transferred into the special drawing board of the International Monetary Fund, which is clumsier Still, still. And they’re not going to squawk about it. They’re going to let that happen. And he goes, Yeah, they’re going to do that because it’s all ready to go and so on. So a lot of I think I think they’ll draw the line at some point, and I hope you’re right that they draw it sooner rather than later with this.

Buck:

I believe this is the latest book, right, is The Last Gold Rush Ever. Is that is that your most recent book?

Charles: Yes.

Buck: So this is The Last Gold Rush Ever: Seven Reasons For The Runaway Gold Market And How You Can Profit From It. No, I won’t ask you to give all seven for free, but give us a couple of examples of what you talk about.

Charles: Well, thank you for that. It’s kind of important, having watched these markets over many, many years. This one this budding beginning to build now a bull market in precious metals that we’re in the very early stages of is unlike the ones that have gone before. And it’s always debt and it’s always inflation that drives bull markets. And precious metals are always everywhere dead to inflation. It’s Weimar Republic, it’s Zimbabwe, it’s debt and inflation. But there’s something else going on here that makes this quite unlike the bull markets that have gone before. It makes it in my apocalyptic terms, sort of kind of the last bull market, never in gold and silver in the dollar as presently constituted, and that is that we have this kind of convergence of all these things going on at once, in addition to the debt and in addition to the money printing and fiat money.

And so it’s like when, you know, an arson investigator comes to the scene of the fire and he says, okay, so the firewood burned and the two-by-fours burned and so on. But if they suspect something’s wrong, they go looking for accelerants. So in addition to the debt and in addition to the money and there are a lot of accelerants now that make this unlike other bull markets and one of them is the site, I think everybody knows this now is that the United States, global military empires coming undone.

It’s very clear that the world is not marching to our tune anymore. We are driving people around the world into one another’s arms and out of ours are promiscuous use of sanctions and so on. Is creating new international global accounts, settlement systems that are established specifically to bypass the dollar. So you’ve got all of that going on. At the same time, we have, you know, one of the biggest debtors in the world and still some historically low-interest rates. So we have that going on. At the same time, war on cash is another component. When there’s a war on cash, people instinctively begin to look for alternatives that gives them a chance to be outside that war, to get their assets on the firing line. So you’ve got that going on. So those are a couple of things. The war on cash, the end of the dollar hegemony, the end of the US global military empire is very big. You know, the world had agreed to take U.S. dollars as their reserves, as they used to hold gold in their central banks and issue their currency gets the gold they’ve been holding dollars since the end of World War Two.

But as we talked about earlier, they’re becoming very skeptical about about the dollar. So new reserve alternatives are in development now, and this will cost the American taxpayer substantially with the declining role of the US dollar. So this bull market is unlike any other setting that has a finality to it because it is the end. After a couple of hundred years, reserve currencies fall by the boards. They seem to have kind of a lifespan. There go a couple hundred years, whether it’s the pound sterling or the US dollar. And we are at the end of that timeline, in my view.

Buck: John, you see how you can profit from it in that title of the book. It’s basically to buy gold, right? Okay. Well yeah, that makes sense. Do you have a sense, Charles, of you know, it always seems to me that like major steps like this, major changes in history, you know, the Bretton Woods or whatever, those types of things happened because of some cataclysmic event that gives the government governments the opportunity to change things because they said, well, we have to change things now. We can’t go on. You know, do you good, right? Yeah. Do you feel like that’s kind of, you know, the trigger point in your view, like of of when some of this may really come to fruition?

Charles: I do. And I actually I think I think that the most immediate prospect that should be somewhat worrisome is prospect of war. Um, and there is no clear saber rattling going on that has not been heard in this world since 1962, the Cuban Missile Crisis. And it’s a little bit frightening to hear just how cavalier people in high places can be talking about these things. And when countries are cornered, they lash out with great powers or challenged. They feel that they have to lash out with. All the elements are there. And I think there’s there’s a little bit of the lift rating and sanity in high places for people that think that nuclear weaponry and nuclear engagement wars of proxies can be contained and that nuclear weapons can be used even on a tactical basis, and that somehow there’s still a lid on their wider use and so on.

But that is exactly what you’re what you’ve referred to. In my view. It’s the worst example of it is the most dramatic example of it, but kind of triggering and we use the word advisedly, the kind of triggering of that will change the global monetary system in the likelihood of. And I so yes, actually it is I think the number one thing to be concerned about right now, it’s very the prospect.

I don’t think the American people really have an idea how serious all of this has become. And that’s kind of a specialty with me. And I’m not going to take advantage of your time here to talk about it at length. But things are happening very, very fast. And to somebody like myself that has watched it for a long time, I’m almost astonished at how fast things are moving in a way that could prove to be very frightening indeed.

Buck: Well, I can see with confidence, I hope I hope you’re wrong about all things, Charles, but it’s great to have you on the show. And the book, again, is the last gold rush ever seven Reasons for the Runaway Gold Market and How you Can Profit from it. I assume you can get this everywhere. Amazon, all that usual suspects.

Charles: All the regular places. Amazon, of course.

Buck: Fantastic. Charles thanks again so much for being on Wealth Formula podcast.

Charles: Yes thank you so much for having me on. I enjoyed it a great deal.

Buck: We’ll be right back.