I think a big part of– most people in the
gold world argument is there’s a finite amount
But there’s a lot of claims on it.
But there’s only so much physical gold that
But then there’s the GLDs, there’s the futures
contracts that aren’t really backed by gold,
or you know you can’t take delivery, the ETFs.
So a lot of the argument is that when people
scramble for gold, there’s only so much actual
physical that exists that’ll push the price
up a lot.
It’s going to go up.
And of course, you know GLD, that is physical
gold because the GLD, the ETF has to buy the
actual gold in order to issue the shares.
But yes, in the futures markets, there it’s
a whole different ballgame.
Because there, you have people selling gold
who don’t have it.
And people are buying gold that don’t actually
They never intend to take delivery.
So you can have this paper market of basically
gambling on the price of gold.
But yes, a lot of the demand that might otherwise
go into real gold ends up going into futures
contracts, which is not buying any actual
But where the problem is going to set in–
and maybe it’s not a problem.
If you’re long gold, it’s an opportunity,
or a good thing.
But at some point.
A lot of the owners of these futures contracts
are actually going to request delivery.
Because just because they don’t do it now
doesn’t mean they won’t in the future.
And at some point, the longs are going to
want delivery and the shorts are going to
get delivered a notice that says, yes.
You need to deliver your gold.
Now the shorts don’t have any gold.
So now they have to go into the market and
actually buy it.
Well where are they going to get it?
And that’s when you have a huge move up, and
maybe even a bankruptcy of the COMEX Or does
it have to be bailed out?
Or what’s going to happen?
Or are the people who are requesting their
gold going to be told you can’t have it?
You know, you’re going to get paid in cash.
Even though you requested physical delivery,
it’s not going to happen.
So this could be an explosion of real buying
And there are a lot of people that own gold.
That, oh, it’s all manipulated.
And all the paper markets are keeping it down.
Maybe so, but it can’t go on forever.
And for me, if they are manipulating it, that
means the price of gold is artificially low.
That means it’s a great buy.
Right, we’re going to get paid.
Right, when was the last time gold was really
It was when the government controlled the
price until 1971.
It was fixed at $35 an ounce.
And then Nixon devalued a couple times to
about $42 before we went off the gold standard.
But for years, the price of gold was artificially
But as soon as that stopped, gold went from,
what, $40 to $850.
And so I think gold has been suppressed, whether
it’s an orchestrated plan to suppress it,
or just based on market forces of people just
doing what they’re doing.
But you have a lot of activity that I think
has suppressed the price of gold.
But it won’t go on forever.
And eventually, market forces are going to
overwhelm what’s going on to keep the price
of gold down, just like eventually overwhelmed
the government’s ability to keep the price
And the price is going to find a real value.
And it’s going to be much, much higher than
it is today, which is why people should own
Now, should they only own gold?
I don’t know I never tell people to only buy
But people should own gold.
They should own some gold.
And they should own gold stocks.
I mean, these things are dirt cheap.
I mean, if you want to look at what stocks
can do, look at what gold stocks did in the
I mean, there were stocks that went up 50,
That’s going to happen again.
All right, so people just have to be in these
Do you have to have your whole portfolio?
But have some money in these stocks.
Most people today have no money in gold, and
they have no money in gold stocks.
So using that same kind of analysis that we
just applied to gold that there’s a limited
amount of gold, and a lot of claims on it.
And at some point, when people call for delivery,
it will push the price up.
If we do that same analysis on the dollar.
There’s only $4 trillion of base money.
Everything else is loaned into existence.
But we’ve got $50 or $60 trillion of dollar-based
debts in the world.
That doesn’t include the unfunded liabilities.
That doesn’t include the derivatives.
So if we do get into a deflationary scenario,
before the inflationary scenario comes, the
stock market starts to crash.
And we go start into another 2008-type event.
Doesn’t that start a daisy-chain of claims
on only $4 trillion that exists?
And for a short period of time, won’t the
dollar have those same characteristics that
we just talked about with gold?
No, because, I mean because dollars, A, intrinsically
have no value.
But B, can be created into existence by the
They can create dollars whenever they want.
But they won’t do it until it gets strong,
If it’s falling, why would they create more
Well, in order to prevent rates from rising,
and in order to bail out the government.
So let’s say we do have a deflation, and rates
start to rise, and the government has to default
on the treasury bonds.
Is the Federal Reserve going to sit back,
and allow the US treasury to default on the
Or will the Federal Reserve bail them out
by buying the bonds themselves?
Right, because if the market doesn’t want
them at artificially low interest rates, and
the Fed– and the Treasury, rather, can’t
afford to pay higher rates, the only buyer
is the Fed.
Also, if the government has a choice.
Hey, we have these Social Security benefits
that we need to pay, but we don’t have any
Where are we going to get this money?
Oh, well, maybe we’re going to default.
And tell the people who are expecting a Social
Security check, you’re not going to get your
Or we have all these government workers who
They’re expecting a pension.
You know, we’re out of money.
We’ve just got tell them there’s no check.
Is the Federal Reserve going to sit back and
allow all this to happen?
Or is the Federal Reserve going to create
the money to make it all possible so that
the politicians could pay what they owe?
I think that’s more likely, than that they
just apply the tough love.
And say, it’s tough love.
And say, hey.
You’ve got a crisis.
Deal with it.
Decide what– you know, cut spending.
I don’t think that the Federal Reserve– our
Federal Reserve is going to do that.
So gold, we know.
If we run out of gold, it’s gone.
You can’t just– you have to mine it.
It’s hard to find.
It’s expensive to get it out of the ground.
They can put as many zeros as they want on
They can push buttons, and create them in
So it’s not the same thing.
We did have a run–
But leading up to it, until they pushed the
When people are going to the banks, and there’s
a run on the ATMs, and they can’t get that
cash in– I don’t know– the two days, the
week– the two weeks it takes to pass this
–doesn’t the dollar go up?
Look, it went up in 2008.
That’s kind of what I was thinking.
But that’s because it was at an all-time record
So it’s not nearly an all-time record low
It’s not even close.
And there’s not a bunch of people short the
dollar today like they were in 2008.
And remember, back then, oil was $150 a barrel.
You know, plus gold in 2008 had just gone
from under $300 in 2001 to $1,000.
So gold had just had 10 years in a row of
going up, and hit a record high.
And then you had that.
So we’re not in that position now.
We’re not even close to that position.
In fact, if you wanted to look at something
that’s similar, go back to 2000-2001.
Because when we had the stock market bubble
at that time, gold had been in a bear market
for 20 years.
Right, the dollar index was $120 in 2000.
And when the US stock market bubble burst
in 2001, the dollar went down.
Gold went up.
So today, we’re similar to that circumstance
in where the dollar and gold are trading.
So right now, we’re going to get movements
into gold and out of the dollar because of
just where everybody is aligned.
But ultimately, if we get the type of crisis
I believe, where the Fed has to allow inflation
to rage out of control.
Or they’re forced to print money into a weakening
economy, into a falling bond market, into
our inflationary environment.
Where gold prices are rising, where commodity
prices are rising.
That’s the end game for the Fed.
Because now everybody realizes the box the
Fed is in.
They can no longer pretend that they’re going
to be vigilant and fight inflation.
Because they’ll obviously have surrendered
Because they’re going to choose to fight recession
They’re going to choose to bail out the government
rather than defend the dollar, and protect
its purchasing power.
And then the game is over.
Then there’s a run.
And then the Fed is going to lose control.
And at that point, we’re going to have to
make a very difficult decision.
The Fed is going to have to make a decision.
It’s going to be, OK.
You know, do we now raise the interest rates
dramatically a la Paul Volcker to save the
dollar from collapsing into nothing?
Which would be a complete disaster.
But in order to do that, we’re going to have
to bring about a crisis on our own.
Which is going to be much worse than the ’08
Because all the big banks that we bailed out
will fail again, except there’s no bailout
And it’s not just going to be the shareholders
of the banks that lose money.
And it won’t just be the bondholders.
But the depositors– in order for the Fed
to do the right thing, it has to let depositors
of Bank of America, of Wells Fargo loose their
Because there is no money there.
And the Fed cannot bail out the banks if it’s
also raising interest rates, and shrinking
its own balance sheet.
So all the chickens have to come home to roost.
The government has to fess up.
We have to default on our bonds.
We have to tell senior citizens, you’re not
getting Social Security.
You’re not getting Medicare.
It’s all over.
You know these were promises we made to get
We can never keep them.
And you know, this is what you get for trusting
John Belushi style.
You know, you F’ed up.
And just admit all that.
Or you know, they don’t admit all that.
And the dollar does become monopoly money.
And then, now we’re Zimbabwe.
But you know, we’re going to have to choose
I hope they make the right choice.
But either way, the price of gold is going
Just if they make the wrong choice, it’s going
Right, because the dollar goes to zero.
But hopefully that doesn’t happen.
I mean, I want to make money, but I don’t
want to make it that bad.
I don’t want the country to suffer to that
You know, I know it’s going to suffer.
But I hope that we take the right medicine
so that we ultimately can end the suffering,
and have a real recovery.