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Dec. 27, 2023 - Epoch Times
25:19
Gold Hit All-Time Record High as Central Banks Buy 800 Tons in 2023
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While most Americans have been focusing on the rising inflation, the war over Israel, as well as all these lawsuits that have been lobbied against President Trump, what seems 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 just Russia and China.
Looking across the entire world, it seems like the central banks of most nations are increasing their stockpiles of gold.
In fact, quote, And just for your reference, the period last year was already a record high.
And then in terms of the country, which is stockpiling the most, well, it's America's greatest geopolitical rival, who also happens to own the most amount of U.S. debt, Communist China.
Quote, The People's Bank of China regained the title of the largest buyer globally, increasing its gold reserves by 78 tons during the third quarter.
Since the start of the year, the People's Bank of China has increased its gold holdings by 181 tons to a total of 2,192 tons.
Furthermore, it's not just the central banks of nation states that are hoarding gold.
Individual citizens here in America are, likewise, buying up gold at breakneck speeds.
For instance, Costco recently began selling gold bars over on their website.
And in the last quarter, this one retailer, Costco, they alone sold over $100 million worth of gold, with these gold bars typically selling out within hours of going online.
Here's in fact how Costco's chief financial officer, And indeed,
as global volatility has increased, both economically as well as militarily, the price of gold, which is typically seen as a hedge against both inflation as well as uncertainty, has gone up as well, hitting an all-time record high just earlier this month.
And so, in order to get an idea of what's happening, what this means for the common investor, as well as what exactly these central bankers are seeing in the future, I got a chance to speak with Mr.
Max Baker, who is the president over at American Hartford Gold, one of the largest gold bullion dealers here in America.
Also, by the way, just for full disclosure, they are my own personal gold dealer, and they're also a long-term sponsor of this program.
However, just in my opinion, that only gives them more, you can say, credibility, given the fact that in the current media environment, while sponsoring a program like ours, a program like Facts Matter actually requires a company to have a backbone, which American Hartford Gold does.
Anyway, back to the topic today.
Being the president of this company, Max has a good feeling for the pulse of the gold market.
Well, and here's what he told us.
Max, thank you so much for joining us.
To start with, right now, we're filming this interview at the beginning of December, and the price of gold is near its all-time high right now.
Can you give us an idea of what it looks like on the back end of the bullion market?
How's the volume for buying and selling right now?
It's certainly a lot of buying right now and not a lot of selling.
It's odd to see The dollar near all-time highs and see the stock market near all-time highs and see gold near the all-time highs all at once.
But certainly, as the gold market goes, a lot of buying right now, a lot of preparing for 2024.
So you're seeing a lot of buying, not a lot of selling.
Is that creating a squeeze on the supply side?
Yeah, definitely.
You're seeing wait times from the mints for getting some of this physical product.
It's becoming tougher and tougher to source, and the wait time for getting it shipped out is getting longer and longer.
What do you think owes to the spike in price right now?
Because I assumed when the war in the Middle East kicked off, you'd see a corollary spike, but you didn't quite see that.
There was a lag of about two, three, maybe even four weeks.
What do you owe right now to the near all-time high?
Well, right now, you know, people are betting that interest rates are done rising and that they're going to start softening going into next year.
And with that, you're going to start to see the dollar pullback.
And as you see the dollar pullback, gold prices are going to rise.
And that's kind of been the story this year.
Gold's been remarkably resilient.
The gold price has been resilient all year long with the dollar being so high.
And now that you're seeing the dollar pull back because of war, you know, war fears, recession fears, as that dollar pulls back, you're going to see gold rise.
What effect are you seeing from the...
Well, or rather, are you seeing any effect from the Argentinian election?
I mean, now, after Millet came into office, he's, you know, very famously going to be taking an axe to the Central Bank of Argentina, and that has kind of brought...
The conversation of what does a central bank do?
How does money come into existence?
It's brought that to the fore.
Do you find that that has any impact on the gold price or is that just more like psychological and it's just in my own head?
It's a little psychological, but there's something to be said there for the great unknown of what lies ahead in election year for our country.
In 2024, you know, your guess is as good as mine as to what's going to happen next year.
And we look at what happened in Argentina.
We may have, you know, some major changes across the globe next year.
And anytime you have those unknowns, people are looking to buy an insurance policy.
And that's exactly what gold offers.
You know, I was reading, I usually keep abreast of the quarterly reports from the central banks across the world in terms of their gold buying.
So gold buying is, again, either reached an all-time high or it's near the all-time high for the last quarter reported.
And what was interesting is that you had a statement from the Dutch central bank wherein the commissioner there alluded to Them wanting to create sort of an internal parity between their assets and the amount of gold they have on the books, just in case there's some sort of a reversion to the gold standard.
Do you have any comment on that?
Since you're in the market and I'm sure you have your pulse on it, do you hear any rumblings of that coming to fruition?
You know, the big rumblings I'm hearing are what you mentioned at the beginning.
Central banks are buying gold.
Hand over fist right now.
I believe it's at a 55-year high with the amount that they're buying.
You got to do what the central banks are doing.
They're preparing for something.
They realize that there's an awful lot of debt out there, a lot of paper debt created over the past three or four years.
They're moving as much money as they can into something tangible.
In case there is, you know, kind of that big recession, that big market meltdown.
And, you know, quietly behind the scenes, they've been buying like crazy over the past couple of years.
And it's really helped keep the gold price very, very buoyant and near the all time high.
Or rather, I should say that this is fake money being printed into oblivion by those geniuses over in Washington, D.C. And so before they completely obliterate your life savings, what I recommend you do is to convert that fake money into real money, which is physical gold and silver.
And the best company to use is the sponsor of today's episode, American Hartford Gold, who also happens to be my own personal gold and silver bullion dealer.
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And now, let's head on back to the studio.
Yeah.
And there's one thing I've been thinking about recently, which is that it seems like, you know, we're sort of at the tail...
I mean, this is just my assessment of it, but we're sort of at the tail end of this, like, Keynesian economic experiment that we've been going through since the 1970s.
And with the recent increase in rates, we actually on the Epoch Times website just published this really good analysis detailing how...
The cost just to service the interest on our debt here in America is now over a trillion dollars per year.
So it's like, it just seems like we're in, unless there's a drastic shift, which I couldn't imagine because it would create such short-term pain that no politician in their right mind would actually run on that sort of a platform or enact that sort of a platform.
It seems like we're sort of in this end cycle where, you know, everything seems fine, but then like, you know, overnight, suddenly the payment on the interest will be five trillion a year if this continues.
It's like, All of a sudden, it's going in that direction.
And in a certain sense, I would imagine that a reversion to the gold standard would be the natural sort of course of events, right?
Because that's what we had before the 1970s.
But then, I believe maybe in like 2017, 18, and going into 2020, there was a bit of a hiccup, at least in my calculation along that line, with the mass adoption of cryptocurrencies like Bitcoin, Ethereum, things like that.
Did you find that once those...
Those cryptocurrencies began to gain a lot of social traction.
Some of the money and attention that would have funneled into gold funneled instead into the cryptocurrency space.
That's a good question.
And, you know, the answer to that question has changed a lot over the past couple of years.
You know, when Bitcoin was near the all time high there a couple of years back, all the headlines were it's digital gold, it's the new gold.
And everyone was kind of pioneering That narrative and as we've seen over the past couple of years, it's been extremely volatile and you've seen FTX and Binance and all these things happen in that crypto world that have really brought the spotlight into the fact that it is not digital gold.
And people have started to pay attention to what gold really is and what that means as far as not having any counterparty risk whatsoever.
You know, physical gold is the only thing on earth that doesn't have counterparty risk.
And, you know, if I'm holding a cryptocurrency and a crypto wallet, you know, on some kind of platform, I still have some counterparty risk associated with that.
And I think if anything, it's brought the spotlight maybe to the younger generation to realize that, you know, what gold really means.
And when you say that it's a digital gold, what does that actually mean?
And so, yeah, a couple of years ago, you were seeing those headlines nonstop and you're not seeing those headlines quite so much anymore.
Right.
Yeah.
And that's sort of what I was wondering about, because I can imagine that as this Keynesian experiment, you know, kind of reaches its final stage, you get a reversion to something.
I would have imagined before that it would have been a reversion to gold.
But now I'm wondering whether it would be the adoption of something like either a cryptocurrency or and or like a central bank cryptocurrency.
Any comment on that?
Yeah.
I mean, look, Here in the very near future, we are going to see a digital dollar of some kind, and that'll be very bullish for physical gold just because of the privacy associated with it.
Anytime someone can hold wealth at that time, let's say we have a digital dollar and it's linked, and another way we can spend is if the government knows what we're spending our money on and tracking what we're spending our money on and keeping an eye on everything, if you're then able to hold Hold just a portion of your wealth in something private, you can imagine that you're going to have households all over America buying as much gold as they can.
In terms of exposure to gold in the global sphere, what I'm really surprised to read about every few months that I come across this stat is how few wealth managers hold gold in terms of their portfolios.
The last I read is that 71% of advisors have either little or no exposure to gold.
And so let me ask you, right now gold is obviously reaching new highs.
Very likely, given some of the global instability, I would imagine, I mean, I'm of course not a forecaster, but I would imagine that it'll break through that 2060 ceiling and perhaps hit 2100, 2150 maybe.
I mean, whatever.
I'm not prognosticating, but a guy can hope.
Let me ask you this.
If 71% of advisors have little to no exposure in gold, What would it mean if they look at the market, they see gold reaching new highs, and they begin shifting at least a small portion of their portfolios on a global level to the precious metal?
Can you sort of describe what that scenario would look like?
Yeah, I mean, look, I understand to an extent why there's not all that exposure.
Gold is relatively boring, and by design, gold is an insurance policy, and it's very, very boring until it's not.
And these wealth advisors are just looking for yield, as much yield as they can get, trying to make as much money as they can.
And then when things, you know, the tide starts to turn in terms of a recession, a financial crisis, you know, geopolitics, some major event, a bank crisis, whenever those come into play, they start to shift the portfolio towards gold.
And you will start to see that in the coming year as gold continues to rise.
As the dollar pulls back, as we head into some kind of a recession, as politics stateside with election year coming into play, you're going to start to see those portfolios gain more and more exposure, and you're going to start to see gold snowball in value, similar to what we saw from 2008 to 2011.
You're going to see a major move.
You know, I would think by the end of 2024, about a 25% move towards 2500.
So you're suggesting that's sort of like the analogy to the national debt, where it kind of grows slowly and then it grows suddenly, right?
Yeah.
It would be something similar where the price of gold increases, and then because of that increase, you have this giant portion of wealth managers, 71% of whom don't have any gold.
If they move even, let's say, 5%, 10% of their portfolio into gold, it'll just create that upward pressure.
Yeah.
Is that accurate?
100%.
Look, 2008 to 2011, we saw the dollar fall from 90 basis points down to 70.
And in that time, gold went from 700 an ounce to 1,900 an ounce.
So about a 3X move, about 250, 280% move up.
I could see something very similar over the next couple of years.
Yeah, and what's funny is that a lot of people, like you mentioned, it's kind of boring until it's not.
I remember when the Ukraine-Russia war first kicked off, I was sitting at my desk here at the office, and a lady walked by, and she knows I buy gold.
I mentioned it on the program.
And she comes up to me, and she's like...
Hey, you know, my husband and I are thinking about buying some gold.
And it was funny because at that time, the Russia-Ukraine war kicked off and the price of gold had skyrocketed.
And I'm thinking to myself, you know, I'm like, at that time, I'm like, hmm, maybe I should wait until, you know, should I wait to buy gold?
Or, you know, I'm kind of feeling it out.
But it's funny how, like, it's true when things are kind of quiet, it's a great opportunity to buy gold.
And then when everyone's rushing into it, it's like, Well, maybe it's like skyrocketing up to 2500 and you miss that great buying opportunity to capture that spread.
Yeah.
So let me ask you a couple of questions that I got from viewers of the show who are looking to invest themselves, but they have some specific questions on the buying front.
This isn't like a macro question.
It's more like kind of more specific questions.
So one is, can you elaborate on the concept of paper gold and how it differs from physical gold?
Yeah, look, if you're going to protect your house, do you want to buy stock in Smith& Wesson or do you want to buy the actual gun?
Paper gold is for taking advantage of the price swings in gold and silver.
The actual physical gold is for protection.
Again, we talk about no counterparty risk and some kind of financial crisis.
2008, you had Fed presidents talking about we were hours away from the ATMs not working.
It's for that kind of scenario to actually have the physical protection in your hand, no counterparty risk, in your gun safe there at home.
And paper gold does have a huge role in the international and our stock market as well.
I believe the market cap is somewhere around $13 trillion for gold.
The overall stock market value or market cap is closer to $45 trillion.
So you can see the gold market is very, very substantial.
Gold is the only real money out there.
Everything else is just credit.
There will continue to be a huge market for it, particularly as we continue to create all this debt that we've created over the past couple of years.
It does have its place in the market.
It is substantial.
Again, if you're looking to take advantage of price swings to get yourself some gold ETFs or mining stock, if you want an actual insurance policy to protect your wealth, Against any kind of black swan event, you're going to want something tangible.
So just so I understand correctly, if you get a gold ETF, you're interested in kind of, like you have this hypothesis that the price of gold is going to swing up, whether it's like intraday or intraweek, and you want to kind of trade on that.
So you buy into the ETF, you sell the ETF, etc.
Or you hold it for a long period of time to capture that spread.
And then technically, it's easier to sell because you don't have to go find a gold dealer or something like that.
But then...
Let's say it really skyrockets or there's a real turbulence in the market.
When you hold a piece of gold, it's in your house, whatever, nobody can come to get it.
But if you have the ETF, is it ever convertible into gold or it's just a piece of paper that's tied to the price of gold and that's it?
It's backed by nothing?
Just a piece of paper that's tied to the price of gold.
That's it.
You're never going to get physical delivery of that asset.
I see.
So it's very much like a stock in a company, basically.
Absolutely.
Just a stock in gold.
Yep.
And you're betting that's going up or down.
Okay.
Another question that has come up pretty frequently.
Why are premiums different on bullion bars and bullion rounds versus state-issued coins?
Usually on state-issued coins, the premium is significantly higher.
It just all comes down to demand.
The market wants government-backed assets or government-minted assets.
Those carry a significant premium because there's more demand for them.
They also buy back for substantially more than maybe a private mint bar or private mint round.
Oh, interesting.
In terms of buying it back, how easy is it to sell gold?
This is another question that often comes in.
If stuff really hits the fan, how easy is it to convert your gold into cash or some cash equivalent?
Extremely easy.
Depending on the city you live in, the town you live in, chances are you have a gold buyer or seller there locally.
Where you can take a couple of Silver Eagles down and liquidate pretty easily.
And then, obviously, you can jump online and find a number of reputable dealers that, you know, will buy that in a heartbeat.
We offer a two-way marketplace here at American Heart for Gold with all of our clients.
We have a buyback commitment to all of them and, you know, that two-way marketplace.
Gold is always in demand and we always want your gold.
So, for instance, with you, because you don't have a physical location, let's say in New York City, if I were to sell you my precious metal through that buyback program, would we just agree on a price and I would package it up and send it off to an address?
That's right.
You know, if you're a client of ours or a client of another company, you're simply going to call American Heart for Gold or another company and say, hey, what's the gold price today?
I've got X amount of this coin or this bar.
What's the price?
We agree on the price of what the market's trading at that day.
And we send you all the shipping boxes, all that good stuff, the label that's fully insured.
That'll get you the next day.
Within 48 hours, we'll have the medal in our hand and we'll issue a check or a wire.
And then another question that people often ask is, how can people be sure that the gold and silver is the real deal?
So let's say they buy from you or some other gold dealer and they get it shipped to their house.
How do they know that it's not some fake Chinese gold, for instance?
Great question.
And that's why you want to only deal with reputable dealers.
Always do your research on who you're dealing with, who you're sending money to.
You want to deal with companies that have been in business for years and years, companies that have, you know, A-plus reputations with the BBB, thousands of client reviews.
You need to do your research on who you buy from.
And then obviously, you know, what kind of assets are they selling you?
Are they selling you government-backed assets?
Are they selling you assets that You've never heard of from some private mint.
So it all comes down to who you're doing business with.
And certainly as a consumer, research is very important.
So that's on the front end, on the consumer end.
On the back end, do you guys test all the bars and coins that come in?
Absolutely.
You can do assay tests.
We have lasers that can tell you if it's real or not.
We can drill into bars.
There's three or four different methods we use to verify all the metal that comes in and out of our vault.
It's all done with a series of checks and balances.
All the metals come into our vault via camera, and they're all checked in via camera, and it's all filed away.
And it's a pretty interesting process.
And that's why, you know, metals move a little slow because every time we take metals in or they leave the vault, it's a whole process of people under camera that's signed off on.
It's got to go through several hurdles before it makes it to your front door.
And then last question that has come up quite often is kind of a simple one.
On the website, typically when you're buying gold, it's listed in troy ounces rather than regular ounces.
What's the difference there?
A troy ounce is about 10% heavier than a basic ounce.
And I actually had to look this up because I didn't have my facts right.
I learned it a long time ago.
It's actually 480 grains of barley.
And that was arrived at in a French town called Troy, long ago.
So 480 grains of barley was a troy ounce.
It's about 10% heavier than your basic ounce.
Oh, okay.
Because when I first started buying, I thought it was like a trick that it's actually less than an ounce.
It's like, oh, a troy ounce, what does that mean?
But it's actually more.
Yeah, yeah.
Max, thank you so much for the macro picture and also the micro.
Listen, I personally hope you're right that by the end of 2024, we'll have a 25% swing in the price.
That's definitely what I'm hoping for.
It's tough.
Obviously, I'm in the gold business.
I see things unfolding to where gold could be $2,500.
It is a little sobering when you realize if gold's at 2,500, gold's at 3,000 an ounce, what does everything else look like?
What do we look like geopolitically?
What does the dollar look like?
What does the stock market look like?
If gold is crushing all-time highs like it did from 08 to 11, what does the rest of the world look like?
So that's a bit concerning.
Yeah, you know, the writing's on the wall.
Things are lining up for a perfect storm for gold in 2024.
Yeah, it's like what they say about the medical business.
You know, it's like when the doctor's business is good, that's actually good for him, but not so great for the community.
I guess gold is the same way.
It's a great hedge.
But if it's doing well, I guess everything else is going to, you know, not in the right direction.
Let's just say that.
So, Max, thank you so much.
If anyone's interested in American Heart for Gold, I'll throw their links down into the description box below.
And then, yeah, take care.
Now, if you'd like to learn more about either the central bankers buying up gold bullion, about Costco selling out gold bullion, or if you'd like to learn more about American Hartford Gold, I'll throw all those links down into the description box below this video for you to peruse at your own leisure.
And then, until next time, I'm your host, Roman, from the Epoch Times.
Stay informed.
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