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March 1, 2023 - Epoch Times
15:53
Central Banks Quietly Buying Gold At Fastest Pace In 55 Years: Russia and China STOCKPILING Gold
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While most Americans have been focusing on the rising inflation, the war over in Ukraine and all the money we're sending there, as well as the Chinese spy balloon, what seemed to have flown completely under the radar was the fact that both China and Russia have been stockpiling massive amounts of physical gold.
Furthermore, it's not even just Russia and China.
Looking across the entire world, it seems like most central banks are in the process of increasing their stockpiles of gold.
In fact, according to the World Gold Council, central banks bought a record 399 tons of gold just in the third quarter of last year alone.
That's the most recent data point that we have access to.
What that means in practice, though, is that central banks are buying up gold at the fastest pace in the last 55 years.
Which is notable because 55 years ago, the US dollar was actually backed by gold, and most other currencies were tethered to the US dollar.
But now, the US dollar is backed by nothing.
Depending on how you look at it, the U.S. dollar is technically backed by either debt to the Federal Reserve or it's backed by oil through the petrodollar recycling scheme, although that scheme is beginning to crack as well, with Saudi Arabia reportedly getting ready for the petrodollar's collapse.
And so, in practical terms, at the same time that the US government has racked up an impossible amount of national debt and printed the US dollar into near oblivion, we're seeing central banks across the entire world ramp up their hoarding of physical gold.
We're also seeing different countries smelling blood in the water and beginning the process of forming alliances to create a new global reserve currency.
Such as the initiative that's being driven right now by Russia and China with the BRICS nations, which of course include Brazil, South Africa, and India.
So the big question here is, with all these giant players making these big moves, what will it do to gold as a store of value?
And perhaps more importantly to anyone watching this video, what will it do to the price of gold?
And so in order to get an idea of what this all means and what exactly these central bankers are seeing in the future that we might not be, I got a chance to speak with Mr.
Max Baker, who is the president over at American Hartford Gold, one of the largest dealers of gold bullion here in America.
By the way, just for full disclosure, they are my personal gold dealer.
I usually buy from them once a month.
And also, they are a long-term sponsor of this program.
But in my opinion, that only gives them more credibility given that in the, you can say, current media environment, sponsoring a program like ours, a show like Facts Matter, and helping the truth get out to ever more people actually requires a company to have a backbone, which, fortunately, American Hartford Gold does.
And being the president, Max has a good feel for the pulse of the gold market since he buys and sells such large volumes every single day.
And here's what he told us.
Max, thank you so much for joining us.
So the first question I had is I saw a report not too long ago showing how from the 2008 financial crisis up until now, central banks have increased their gold holdings by 25%.
Even while publicly they kind of demonize gold, say that it's a relic of a barbaric past, privately they're actually hoarding gold, especially China, Russia, and some of the kind of more developing countries.
Why is that?
Why do you think that they're hoarding gold?
You're right.
In the third quarter of last year, they purchased 400 tons, which is the largest purchase on record.
So, they're certainly stockpiling and looking at countries like you mentioned, Russia, China, Iran, you know, they're looking at digital currencies right now.
They're looking at backing those digital currencies with gold, with something stable.
So, you know, that's coming out in reports.
You're not really seeing it in the mainstream news, but it is making its way there little by little.
And certainly, they're not the only countries buying across the board.
The central banks are preparing.
They're preparing for a recession.
And speaking of recession, the numbers just came out here in the U.S. of the inflation year over year.
It's, I believe, 6.4 percent, and it increased by about 0.5 percent month over month.
What do you make of that?
Where do you think this is headed, and what do you think is driving some of that inflation?
Well, you know, from 2020 to 2022, we printed about $10 trillion.
Printed a lot of money, increased the money supply by 80%.
And anytime you print that much money, you're going to have some inflation.
It's going to be pretty stubborn, hard to deal with.
Raising interest rates up to 4%, 5%, 6%.
The cat's out of the bag.
Interest rates alone are not going to prevent inflation.
There's just so much cash out there, so much money printed that we're going to continue to have to battle inflation for a long, long time.
It's not a quick fix that's going to go away here in 2023.
It's here to stay.
When you mentioned the $10 trillion printed, I've been tracking the M2 money supply over on the Fed's website.
I mean, the chart is just astronomical.
Back in, I believe, 2012, I remember seeing the chart and I thought like, I missed the boat on this one, but in the last two years, the chart has just gone parabolic with the amount of money that's been printed.
What do you foresee the price of gold?
Because gold, the reason I buy it is because it's a hedge against inflation, right?
So is there a delay in this money printing versus the actual price of gold needing to catch up to absorb that supply?
Yeah, it is going to take some time.
That being said, you do have just about every major investment bank predicting gold to be considerably higher this year.
From Goldman Sachs, Bank of America, Wells Fargo, UBS, Citibank, they're all predicting gold to rise anywhere from 25% to 70% in the coming year.
And it does take some time for it to catch up, but certainly we're at a place right now with Interest rates rising with a recession on the horizon.
This could be a lot like 2008 where you saw the dollar fall 35% and you saw gold rise 250%.
It's very, very similar to that.
So it will take some time, but the outlook for gold is very, very strong.
What are you seeing on the back end?
Because I know, Hartford, you guys do a lot of selling and buying.
I mean, you're like one of the biggest in the U.S. What are you actually seeing on the back end for your buying and selling?
Is there kind of a creep up or is the strength of the dollar kind of putting downward pressure on the gold price and you're sort of waiting for the dollar to maybe weaken?
Yeah, you know, the dollar has been really, really strong over the past year.
It's just people flocking to the dollar because, you know, if you're in the stock market, if you're in the NASDAQ, you're losing 31% last year.
You had a lot of people flocking to cash.
That being said, gold buying has been very, very steady.
It's actually been on the rise over the past couple of years.
Our company, since 2000, has done 5-6x in sales over the past couple of years, and that's going to continue as the gold price Sold an awful lot of gold last year, and gold was pretty flat, but the stock market was down big.
The dollar was strong.
This year, I'm seeing gold rise, and with that, I believe gold buying is going to continue to pick up.
It's starting to make its way into the news.
Just about every single day, you see something come out, and we're talking Fox Business.
We're talking Bloomberg, Wall Street Journal.
You're seeing articles come out about gold.
And predictions for gold to rise and why people are buying gold.
And so it's been very, very steady, even with it being flat.
With gold taking off this year, it's had a strong start with gold taking off.
I think it's going to be a very, very good year for gold.
Yeah, you know, you're talking about the news media talking about gold, but I sort of always view it in the opposite.
I remember when my Uber driver last year was telling me to buy Bitcoin, I was thinking, now is definitely not the time to be buying Bitcoin when the Uber driver is telling me to do it.
Instead, it's like, you know, you should be buying what nobody is talking about when nobody's talking about it.
When everyone's talking about it, it's probably already...
Sure.
From the back end, you mentioned a few banks having their own projections.
What do you see?
You probably have your pulse on the price there.
What do you project the goal to be by the end of this year or maybe this time next year?
We've been floating around the $1,900 range to kick off this year.
Personally, I believe about $2,300 by year-end is a good place to be.
And then by 2024, I could see us creeping up over $2,500.
And I'm right in line with Goldman Sachs.
They're predicting $2,500 this year.
So that's a 35% rise over the next 10 months.
Wow.
What about silver?
Because, you know, there's usually a very kind of a correlative relationship between gold and silver.
And I read recently that India set some import records in last year for their import of silver, as did a number of other countries.
What do you view silver to be?
Is it going to be better, let's say, this year or over the next year than gold or comparable?
So, you know, gold's traditionally more stable in terms of its price fluctuations.
It's very much a safe haven.
Silver, you know, it can be a little more volatile.
That being said, in terms of getting a return, silver would be where you want to put your money.
If you're looking just for a safe haven insurance policy, throw some money in gold.
If you're prospecting a little bit and you want a return in a short amount of time, silver is a little more risky, but it does move in big swings and it does follow gold upwards.
So if all these major investment banks are predicting gold to rise this year as a safe bet that silver is going to rise, It is very, very undervalued at this time.
So, I personally have been stacking silver.
I do see a tremendous upside in that over the next couple of years.
And so, what are some practical ways that, let's say, somebody's watching this and they're looking at their stock portfolio, which is either flat or down.
They're looking at different commodities that they can get into, but it's like the world right now is a little bit shaky.
And gold seems to be sort of strong with an upward trajectory.
What's the best way to get into it?
I personally have never played with the 401k or IRA approach to it.
How does that work?
Yeah, you know, we have clients that invest in gold and silver.
They want it shipped to their front door and we do that.
But the bulk of our business over the past couple of years with everything in the news is people looking to protect their retirement account.
You know, they're fed up with taking losses in equities.
They feel like it's a casino and so they're moving a portion of their account into physical gold and silver.
It's a pretty easy process.
Open a self-directed IRA, transfer funds tax-free, whatever you're looking to protect or hedge with, and then certainly invest in the gold and silver and that's stored at a third-party vault until you're ready to take distributions of that metal or, you know, gold rises and you want to liquidate, you can certainly take profit.
I think seeing everything from 2020 till now, most Americans are saying, hey, you know, I want to exit the casino and certainly I just want to protect what I have.
And it's a pretty easy process and that's become more and more popular over the past couple of years.
So just to confirm, that is still tax free within the Roth IRA account, right?
To transfer your portfolio into physical gold and silver.
It's still a tax-free process until, I guess, you cash out.
Yeah, that's right.
That's right.
It's still a tax-free, totally free process because you're not taking possession of your retirement account.
You're simply going from custodian to custodian.
In terms of, let's say, a minimum, is there a minimum purchase level to that process?
Yeah, you know, we're dealing in hundreds of millions of dollars.
We are the largest firm in the country by volume.
So we do have a $5,000 minimum on cash transactions.
And a $10,000 minimum if you were looking to hedge with your IRA or 401k.
What do you recommend for somebody starting out?
I'll just preface that by saying when I started out, what I just did is I started putting away money every single month and I was buying silver.
Because it's a smaller entry point.
The spot price difference between the base metal and the coins that actually get delivered to me is pretty low.
And it was a good way to get my foot in the door.
And then once I felt comfortable and I started making more money, that's when I started to go for gold.
You think that's a good process?
I think you hit the nail on the head, that's the way to do it.
You start dipping your toe in the water a little bit, accumulate a little bit of silver, get comfortable with the process, learn about the assets, see some appreciation a little bit, and then down the line you can start doing larger and larger amounts and start getting into gold.
But certainly most Americans are novices when it comes to investing in gold and silver, and so we like to hold your hand through the process, and it is wise to You know, kind of start out small and go from there.
But as you become more familiar with it, you start to understand the big positives in gold and silver.
You know, me personally, I feel very safe having that hedge, that insurance policy on my money, knowing that I've got something that has no counterparty risk.
And it's the only thing in the world that doesn't have counterparty risk.
And with everything going on out there, you never know what tomorrow is going to bring.
So I have tremendous peace of mind.
Yeah, I'll just mention me too.
And in fact, I remember when the lockdowns first began in March of 2020, the price of gold and silver just dipped.
And I was watching that, I'm like, Man, that was a great time to buy.
So I loaded up when it was right there at the bottom.
But what I realized after that fact was I was thinking, well, maybe I should have waited until that bottom hit.
Then I would have placed that order for even more.
But then I realized, like, if I wasn't in that habit of just buying every single month, I wouldn't even know how to do it.
I wouldn't know what to do it.
I wouldn't be comfortable buying that much.
So for me, it was like...
No, absolutely.
Tremendous peace of mind.
You're trying to time the market.
You bought at the right time, but there's never really a wrong time to buy insurance on your money.
Again, going back to 2008, the financial crisis was happening.
Gold initially dipped.
That's because everyone was selling everything.
They were just looking for any kind of liquidity.
But from there, gold rose from $600 to $1,900.
So all along that path, the guy that bought at $700, the guy that bought at $800,000, $900,000, he wasn't wrong.
Within the, let's say, realm of stocks, when you get the annual report of something like Berkshire Hathaway and you find them buying up a large position in some company, in some insurance firm or some construction company, the price of that company seems to Why do you think right now we're getting these reports from these large central bankers who are just hoarding gold and hoarding gold?
And to me, that's a great opportunity for me, like the little guy, to get in there and ride that wave.
But why isn't the price correlatingly rising right away?
What do you think is kind of holding it down?
Yeah, that's a great question.
Why aren't you seeing reports of gold shooting up 15-20% if they're buying 400 tons every quarter?
And certainly it has a lot to do with dollar strength.
It's price in the dollar.
The dollar is very strong right now.
When you see the big $100 moves in gold, it'll be where the dollar is down that day.
And certainly there is some price suppression going on right now as the central banks are accumulating this gold.
And certainly when they're ready to let it rip, it'll move pretty quick.
That's a great point.
If anybody watching this is interested, I'll throw the link to American Heart for Gold.
You can check it out down in the description box below.
Max, thank you so much for your insight.
Roman, appreciate it.
Good chatting with you.
Now, if you'd like to learn more about either the central banks buying up large volumes of gold bullion, or if you'd like to check out American Heart for Gold, I'll throw all those links down into the description box below this video for you to check out.
And then, until next time, I'm your host, Roman from the Epoch Times.
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