All Episodes
Previous Next
April 11, 2021 - The Delingpod - James Delingpole
01:02:54
Keith Weiner
| Copy link to current segment

Time Text
I love Danny Paul!
Come and subscribe to the podcast, baby!
I love Danny Paul!
And there's another time, subscribe with me!
I love Danny Paul!
Welcome to The Deling Pod with me, James Delingpole.
And I know I always say I'm excited about this week's special guest, but I really am because he's going to help me answer some questions that loads and loads of people have asked me, which is like, how do we prepare for economically and what's going on in the world of finance and gold?
Gold!
Dr. Keith Weiner knows all about gold.
Keith, tell me about yourself.
You are CEO of Monetary Metals.
I mean, you're presumably a gold bug, among other things.
You know, I don't prefer that term, because I think of the gold bugs as the people who just want the price of gold to go up, so they can sell it and get more of the fiat currency that they just told you was going to be worthless, and they want more of it.
It is a problem right now, isn't it?
I've noticed this.
Where do you put your assets?
Because fiat currency is losing its value at a rate of lots of knots.
It's been completely sort of debased, isn't it?
And then you've got gold, which is currently, I mean, seems to be going down a bit at the moment.
I mean, certainly it's fallen from, what, $2,000 an ounce to what is it at the moment, about sort of $1,700.
Yeah, a little bit of $1,700.
And then you've got Bitcoin or cryptos where you could make a fortune or you could lose everything at the drop of a hat.
Um, it, it, it, These are crazy times, aren't they?
They are.
I like to think of inflation not so much as about the quantity of dollars or pounds or euros, but the moral aspect to it is that there's a debauchery, there's a debasement, and really the root of it is a counterfeiting.
So if I say to you, I'd like to borrow a thousand dollars or a thousand pounds, and you say, right, what are you going to do with it?
And if I'm honest, I say, well, you know, I plan on drinking.
And maybe I'll do a little bit of gambling with it.
Then you would say, no, I won't lend under those circumstances.
So if I lie to you and I say, well, I've got this great business idea.
And you say, okay, here's, here's the money.
And then it turns out I just go drinking with it anyway.
There's a, there's a fraud going on.
And that's when the, when the borrower has neither the means nor the intent to repay.
And that is, I think the defining characteristic of when the government borrows your money.
They have neither the means nor the intent to repay, and they just say, well, we'll get you back in the future sometime.
And everybody accepts that.
But there's a degradation of the entire system, both in terms of how people behave in business and in investing and in finance, but also obviously in terms of the value of this paper is going down along with the quality of the word that's behind it.
Yeah.
I totally agree with everything you say.
Before we go on, Just tell me a bit more about yourself.
I mean, I know you're an objectivist, which means you're essentially a follower of Ayn Rand.
Presumably you think Atlas Shrugged is a kind of ominous warning of the horrors to come and maybe even how we get out of it.
I don't know.
But tell me about your background.
I started out life as your classic computer nerd.
Went off to computer science school and university, dropped out because I wanted to follow in the footsteps of so many heroes, Bill Gates and others that had come before me.
Built a software company, which I sold.
It was a company called Diamondware.
I sold that to Nortel Networks, August 19th, 2008.
So that was right before everything went over the edge.
Yeah.
As a historical fact, that is the last acquisition Nortel ever did.
Nortel became the largest corporate bankruptcy, to my knowledge, in human history.
Very, very complicated because you had European unions and American bond funds and Canadian pensioners and all kinds of different parties squabbling for pieces of the estate.
So I got to learn more about bankruptcy than I ever wanted to.
And in the fall of 2008, as everything was cascading over the edge, my investment banker called me and he says, Keith, you're the luckiest man in the world.
Now, this guy was diagnosed with stage three cancer in the middle of the deal, checked into the hospital, and his doctors gave him a 50-50 chance whether he would survive one particular weekend.
He calls me up in October and says, Keith, you're the luckiest man in the world, because I was sitting in cash when all of this happened, because just the timing of You know, of everything.
And that really, you know, made me pause and think, okay, how do I protect myself?
What is really going on here?
And so I started, I felt like a moth drawn to a flame, just studying markets and economics to figure out what is going on.
Eventually came to the realization that the problem is a lot deeper than just, you know, quote unquote, a correction, which is what people were initially saying, I think.
Came to the realization that there's a fundamental flaw in the monetary system and said, okay, well, I really see myself as an entrepreneur now as an academic, although I did get a Non-accredited PhD in monetary economics from something called the New Austrian School of Economics.
But I see myself as an entrepreneur and I said, okay, well, I'm too young to retire, but what's my next venture going to be?
Well, in a normal world, it would have been a software company.
My team had followed me to hell and back.
I had access to capital and great advisors and all the rest of that, and certainly no lack of ideas.
But I said, I want my next venture to be part of the solution.
I want to do something.
Gold is clearly going to be re-emerging as something important.
And then I kind of figured out and I kind of clicked, okay, we need to plot a path to get back to the gold standard.
And that's the monetary metal story in a nutshell.
Wow.
I mean, to what do you credit your fortune?
Do you think God was smiling on you?
Or do you think, I mean, was there anything you did to get out In good time.
You know, it's an interesting process of soul-searching and a little bit humbling because you think you're smart and you work really hard and you have a great team and they're smart and they work hard and you have smart advisors.
We had a pretty clever technology.
It was a 3D audio technology for real-time conferencing.
And, you know, we had, I think, 13 patents at the time I sold the company and we had 75 million years invested in this technology platform.
But the timing of it, I mean, I kind of had a bad sense of where the market was going, but not an educated one.
And I wasn't studying economics or markets.
I wasn't actively trading.
I was the typical young CEO of a tech company, nose to the grindstone, focused on Building a technology platform, building customers.
I wasn't focused on, you know, the stock market.
Yeah.
And, um, you know, the timing of a deal like that, it's more dominated by lawyer summer vacations than it is, you know, any of the intentions or cleverness of the, of the entrepreneur.
I mean, when you're selling your company, you just want to get the deal done.
Yeah.
You see no reason for them not to write a check tomorrow morning.
And of course they have a million and one reasons why they're not prepared to write that check yet.
And so it drags on and, you know, that was from January to August basically was the time frame of doing that deal.
And I had very little control of the timing other than to respond when they asked a question in due diligence.
You know, you respond quickly, you respond slowly.
Other than that, I had very little control.
I bet there are loads of Keith Wieners out there who didn't, who, you know, it could have come good for them and they just got their timing wrong because of the lawyer's holidays and they ended up not selling their businesses for gazillions and then timing the market perfectly.
You're right.
There was a meeting that we had, so Northell, being a global company, headquarters was in Ottawa, Canada.
Their mergers and acquisitions group was in Richardson, Texas.
So we went in, myself, my advisor, and my investment banker went in, and the ninth floor was the M&A group.
And we were sitting in the lobby of the M&A group, and there were three other little groups of people there, one of whom I knew, one of whom my advisor knew, one of whom my investment banker knew.
We're like, oh, what are you guys doing here?
I'm not at liberty to say.
So they were all involved in acquisition discussions.
One of those companies got through the gates before the whole thing slammed shut.
Two of them did not.
And so if Nortel, you know, and I don't know how many others Nortel was working on, but there were two that I do know.
If two of them didn't close, then there must have been A lot more, and depending on where your business is.
Now, we were profitable at that point.
We had no debt.
It would have been a big setback.
I think we spent over a quarter million dollars in responding to the due diligence and responding to the negotiation of the agreement and all that.
It would have been a big setback, but Diamondware would have continued as a growing concern.
Some of these companies, this was their exit and their last chance, and then that didn't happen, and they just folded.
You know, declared bankruptcy.
Whoa, whoa.
So, okay, so you've been chosen by God or whoever to, you know, your numbers came up on the roulette table, whatever.
And presumably, you've got a sense of you're on a kind of, on a holy mission now.
I mean, you're gonna repay somehow your good fortune to the world.
I do regard it as being on a mission, I feel like I'm in the right place at the right moment and everything in my Past, you know both personal and professional development has led me to be in this spot to see the problem and To be the guy to build a business to to solve the problem And I'm all in I think if this problem isn't solved something horrifically catastrophically bad is coming and
You know, there's some people that are just resigned to that, and then they're the preppers, and they just buy dried food and barrels of water, and they think they're just going to hide in a hole.
Yeah.
But, you know, when you look at it, I think that's going to be a pretty unpleasant world.
And even if you have the dried food for a year, you're going to be emerging into something a lot less fun than, you know, modern civilization.
And so I'd rather try to avert that Armageddon than, you know, prepare to be living under rocks.
This is an interesting change of pace for my recent run of podcasts.
They have been so bleak and black-pilled.
I mean, a lot of the people I've been talking to, basically, they're taking the view that it's all over, that we are approaching end times, that this is the apocalypse.
And I have a lot of sympathy, I have to say, with that point of view.
I mean, you know, it's my belief that There is a deliberate plan to crash the global economy within the next five years, that governments are going to go on borrowing money that they can't afford, and eventually they're going to run out of money and there's going to be systemic collapse.
But not in individual countries like, say, in Weimar, Germany, or Argentina, or Zimbabwe, but across the world.
And I'm hoping you're going to tell me how this is not going to happen, because I don't see a way out of this at the moment.
Tell me your view.
Well, I think there's a way out.
So, you know, obviously, the problem is the debt.
I mean, that's the elephant in the room.
Yeah.
Every country has racked up a debt, by any measure.
I mean, if you want to divide the debt by the number of working adults, If you want to try to figure out how many years it would take to amortize it at a reasonable interest rate.
I mean, it's, it's beyond ludicrous.
I mean, there's no way.
And that's now.
Some people say, well, right.
And, and, and it's, and it's growing at faster and faster and exponentially accelerating rate.
Yeah.
So before COVID, and I looked at the numbers and it's very fresh in my mind, I've written articles about this.
They increase in the debt that the US Treasury acknowledges.
And I have to put an asterisk on that because they use cash basis of accounting.
And if they kept their books the way every business would be forced to, it's a much bigger number.
But on the cash basis, the debt increased in the 12 months that ended March 31 a year ago, the debt increased by 1.7 trillion.
And they report it as a deficit of around 1 trillion.
So there's some accounting gimmick of how they're allowed to go deeper into debt and not even report that as part of their so-called deficit.
But $1.7 trillion, and I picked that particular 12-month period because that's right before the CARES Act, or so-called CARES Act, because you know that they care because they spent $2.3 trillion, you know, allegedly fighting COVID.
funding every pork barrel project they could think of and slap a COVID label on it.
And then immediately thereafter, they added another $0.5 trillion.
So I really think of the CARES Act as $2.8 trillion on top of a $1.7 trillion deficit equals $4.5.
Then add to that the fact that with all the wreckage in the economy due to lockdowns at that time, I'm sure that the tax revenues fell short maybe by a trillion dollars.
I don't know.
So we're at $5.5 trillion And then obviously in the end of the year, they spent more and now we have a new president and he's spending more.
So we went from, you know, the era of Bush of, you know, a couple hundred billion, you know, deficit every year to the Obama era of a trillion dollar deficit to the end of the Trump era, beginning of the Biden era at, you know, five trillion dollar deficit.
So most people, a lot of people would say, we're going to pay this off with inflation.
I mean, it seems sort of logical if the dollar becomes worth a lot less.
If the price of a hamburger at McDonald's is $1 million, then you've shrunk the burden, as it were, pretty drastically from where it is today.
But the problem is this.
Inflation is the process of borrowing more.
So, just as you can't get out of a hole by digging deeper, you can't get out of a debt problem by inflation.
Sure, each of the dollars you owe may be worth a bit less, but you owe exponentially more of them.
You can't get out of the problem that way.
Yeah.
When you look at the monetary system, and it gets a bit technical and I'll skip over it unless you really want me to get into it, we use an irredeemable currency to pay our debts.
We use dollars and pounds and euros.
But those dollars and pounds and euros are actually the liability of someone else.
They're IOU notes.
So when you pay a debt using an IOU, the debt isn't really cleared, the economic term is extinguished.
It's just merely shifted.
Like you have a lump under the rug and you just sort of push it with your toe to move the lump somewhere else under the rug.
Yeah.
So the total amount of debt is growing by at least all the accrued interest.
And so the debt grows exponentially, as I used to say in my previous career as a software developer, that's not a bug, that's a feature.
of the monetary system.
And so that's why it's so bleak.
It's not a matter of could we find some politicians that have some fiscal rectitude?
Well, that's a problem in itself.
And right now the people don't even want that.
But even if you could, there isn't even a mechanism for repaying debt or reducing the slow.
So the only path out of this is to rediscover the gold standard, not because of inflation and consumer prices and any of that stuff, but because if you owe a debt and you pay a gold coin, the debt goes out of existence with the payment of the coin.
It's not shifted.
You can actually clear the debts.
Yeah.
allow gold to do what it always did, which is extinguish debt.
And that's what I've got a plan for doing.
Okay, so before you tell me about your plan, which I... It would be wonderful if it works.
I have heard people like yourself talk about going back to the gold standard is the only way.
And if we were to do so, I mean, the implications for the gold price would be extraordinary, wouldn't they?
I mean, if you were to go back to the gold standard, am I right in thinking that the real un-revealed liabilities is in the form of the euro dollar, which is on top of all the other dollars that have been printed?
You know, an expert on finances and stuff, but there's all this printed money floating around, which is just crazy amounts of it, unacknowledged really, the scale of the problem.
And that if we took all this into account and went back to the gold standard, so say the gold price now is $1,700 an ounce, what would it be if we went back to the gold standard in your estimation?
The picture that I'm painting is essentially that of a failure of the dollar.
When the dollar becomes regarded as a bad credit, then nobody with gold will trade the gold for the dollar at any price.
And so, the way to think of this, it's hard to understand a price running away to infinity, but I think it's easier to understand the disappearance of a bid.
So, whenever there's a crisis or stress, it's the bid that goes away.
So, I like to use the example, suppose the U.S.
Geological Service says that there's going to be an earthquake in Los Angeles, you know, 16 on the Richter scale.
Everything taller than a dollhouse, you know, will be knocked over.
Well, there would be no lack of offers to sell real estate in LA, just the lack of a bid.
Probably no bid from Santiago, Chile, to Victoria, British Columbia, and as far east as the Mississippi River, there would be no bid on real estate, as everyone is waiting for what's going to happen.
Yeah.
And so, what I see coming is the withdrawal of the gold bid on the dollar.
Gold is money, which I argue that it is for a lot of reasons, and the dollar is a credit of uncertain and declining quality, then gold withdraws its bid on the dollar.
And so then the idea of price of gold becomes rather meaningless in that scenario.
But I do want to say one thing, which is, it's not that Gold has to become so incredibly valuable as a currency that 1,000th of a microgram would be enough to buy a house in London or something like that.
That'd be cool, if you had gold.
It's not a quantity problem.
It's a, can gold be used efficiently to clear the markets?
And so, if you look back to the time when London ran the world's commerce and the world's monetary system, and let's take the period of the 1890s.
Do you know how much gold there was in London, according to the records of the Bank of England?
So I looked it up, and it's interesting.
160 tons.
And with that, they ran the world.
It doesn't sound very long.
No, I mean, so the state of Nevada, which is the biggest gold mining jurisdiction in the U.S.
today, produces 166 tons annually.
So we produce more in one state than London had at the peak of Empire and the peak of the gold standard.
And how much does the U.S.
hold at the moment, for example?
Do we know?
Supposedly 8,000 tons.
Right.
And the U.K.
now?
I don't know.
So I know that Gordon Brown sold half of it.
And they call it Brown's Bottom, interestingly.
But, you know, the 1890s was a time before computers, obviously.
You know, everything was done in letterbooks, written in pencil.
I mean, it was not at a time of efficiency as we think of it today, and yet the mechanisms of the gold standard were very elegant and allowed a small amount of gold to clear a great deal of trade, because the gold could move from one party to another to another, and people trusted the clearinghouses in London implicitly.
Everybody in the world brought their trade and their gold to London because of that, because you had the rule of law, and the system was trustworthy.
And that's really what we need to rediscover.
When people say gold standard today, I think there are two camps, and both of them have kind of an almost frivolous idea.
One idea is, well, the Fed And the Bank of England and the others will set the right gold price and they'll administer that, like some sort of centrally planned price system.
But that's absurd, because they would never know the right price.
There isn't a right price because it's changing every millisecond it ticks up or down.
Um, and, uh, and all the mechanisms have been wrong anyway, doesn't send the right signals and so forth.
And I think the opposing camp is opposed to any kind of banking or fractional reserve banking, um, and imagines that we're all going to be walking around.
Excuse me.
With little leather purses jingling on our belts, and everyone is going to pay for a Starbucks coffee by taking out gold coin, which I think is sort of equally silly.
We're going to clearly have something that looks like what we have today, people paying with credit cards or touching their phone or their watch to the point of sale, and that there will be gold credits and debits going on.
You know, in a banking system somewhere.
And so, for me, the key to a gold standard is that everybody has a choice.
You have a choice to pull the gold coin out if you don't like the terms or the risk or the interest rate, and you have the right to deposit your gold, but only if the risk and reward is the right balance for you.
And that's what keeps everybody honest.
It's that, okay, if the interest rate ticks down, some people will pull their gold out.
If it ticks up, more gold comes to market.
And that's what the central planning faction doesn't understand, is the continual adjustments of prices and the signals and the feedback that they provide.
Right.
But given that the people on the level you're talking about Pretty much acting in bad faith.
They don't have the interests of ordinary people.
It's basically, they're a bit like Vikings, aren't they?
They just want to come and rape and pillage.
I mean, that's where they are.
These are not good people.
I mean, you said at the beginning, the markets have completely lost track with any form of morality.
We are talking sort of Satan's emissaries at best.
So how are these people going to be persuaded to do the right thing?
I mean, I think your plan makes sense, but tell me, I mean, how is it going to work out?
So, you know, there's I guess an idea from objectivism that you're not trying to appeal to the evil people to change their ways.
You're trying to appeal to everybody else who's going along with evil people, either unwillingly or because they don't feel they have a choice or they don't really understand the issue.
And, I mean, that's true enough even in I'll call obvious things like rent control or minimum wage type arguments.
It's pretty obvious what the consequences are.
In the case of money, I mean, so few people really understand it that, you know, the evil people can really get away with murder and nobody even really sees it as murder.
And so I think the model here is take a look at what Uber did to the taxi industry.
They didn't try to lobby the taxi regulators and say, you know, it's really not fair.
You have this taxi cartel and look what they do.
People love standing in the rain, waiting for a taxi for 30 minutes.
They did an end run around that and appealed to the self-interest of the passenger.
said, well, you know, you've got a phone, your phone has GPS in it, your phone has a data connection, you know, here's a map and, you know, we can see where you are and you can see where the car is and you can walk out of the restaurant when the car pulls up to the curb in front of where you are.
And they didn't ask permission and they didn't ask, you know, the taxi cartel or the taxi regulators to change what they're doing.
They just said, well, we can offer The technology makes it possible.
It's interesting you give that example, because what happened in London, and probably other cities as well, is that the black cab drivers lobbied the mayor of London, who is a very dodgy guy called Sadiq Khan.
And sort of said, look, we quite like our cartel.
We've got this thing called The Knowledge, where we spend years learning all the routes in London.
And, you know, they came up with arguments about, some of them may be good, about how they offer a service that some unlicensed Uber driver can't provide.
And I think that they lobbied I can't remember where Uber is now, but they certainly made it difficult for Uber for a time.
You can see that this is going to happen in these Uber hyper-regulated times.
There are going to be forces which are going to conspire against your market-driven plan.
Do you see what I mean?
I mean, the system, the higher-ups quite like this regulated, this corrupt system which has been arranged in their interest.
No, you're absolutely right.
And I think that the key to it is, as with Uber, having enough customers that like the alternative.
Yeah.
And, um, you know, as long as, as long as the alternative is hypothetical, then you have zero customers and everybody remains silent.
And the only voice that's heard is, is the, is the central bank, uh, or the, or the chancellor or the treasury secretary.
But once you have customers and then those customers look at this and say, we'd rather like this new alternative.
Yeah.
Because we're getting paid interest on gold.
I mean, that's what we do as a business, monetary metals.
And they like getting paid interest on gold, in gold, then that's what tilts the equation.
Because I think at the end of the day, you know, the UK, the United States, Germany, France, we're not like military dictatorships like Venezuela.
We're getting that way.
Hopefully not, but I see the trend line.
Yeah.
But, you know, in our countries, you know, the government can't really impose on us something that's deep popular.
There are things that are controversial, so half the people want it and half the people, you know, may want it or quibble with it.
But they can't really force everybody down, you know, down the stairway to hell.
If everyone is saying, no, no, no, we'd rather not go there.
But people go along with these things because, number one, they believe in regulation because they think that that's the only thing that protects them from the raw greed of the corporations.
Little do they understand how the regulation actually works.
It's to protect the cronies from competition, not to protect the consumers from the corporation.
But they go along with it because they believe in it.
And now if you can offer them something that sort of leaks out from around the edges of their regulatory structure, that is compliant and is legal, but is offering them something that's a non-standard solution, then, you know, people will respond to that.
And the one thing I want to say is that I believe the need to earn interest on savings is a universal human need.
It's nothing to do with our times.
This is how we got out of the dark ages.
Because if you can't earn interest on savings, think about the role of the wage earner and how you're supposed to live your life.
You have to set aside a certain percentage of your wage to plan for your senescence.
I mean, forget the concept of retirement, which is a modern concept of senescence.
You know you're not going to be able to keep working forever.
You're setting aside and you're holding silver or salt or whatever it is.
But then when you reach that age where you can't work anymore, you have to sell little bits of it in order to pay for your food, and rent, and taxes, and whatever.
And then you're always in constant fear of outliving your money.
Yeah, yeah.
And so, you know, the quality of life is very low, and there's that very real fear that you're being the beggar in the church because nobody wants to be.
What choice do you have?
Yeah.
And of course, entrepreneurs can't get financing because nobody will lend at zero.
And so, you know, the advent of interest or the return of interest allows the world to get out of the dark ages and begin ascending into the modern world.
Yeah.
And now the central banks basically colluded to push the rate of interest to zero.
And you want to talk about evil people, Keynes writes this all out.
Keynes is the real bad guy, in my opinion.
And he talks about driving the rate of interest to zero, to euthanize the rentier, the saver, and to overthrow the capitalist order, and all kinds of things.
And he gloats at the end of this long quote.
which I've used in my writings, and doing so in such a way as to engage all of the hidden forces of economics, and not one in a million can diagnose what's going on.
He's talking about pushing the interest rates to zero, which creates exactly what we have today.
Asset prices exploding to infinity, so the one percent is happier and happier and happier, the wage earner is being pushed down, It just tears the fabric of society.
He talks about it in terms of destroying the sacred bond between debtor and creditor and ultimately tearing society apart.
So I think he absolutely understood what zero interest rates would do and he advocated for it for that reason.
So do you think he was a kind of I mean, politically, what was he?
I mean, he sounds like a kind of complete lord of misrule.
I mean, like a sort of George Soros or, well, I know you're a fan of his, but Bill Gates.
I mean, like he wants total chaos.
I mean, this blow up that we're experiencing now.
Why would you want that?
What kind of perverse mentality would you need for that?
He was a socialist who quoted from Vladimir Lenin, of all people.
And, you know, for the socialist revolution, you have to overthrow the capitalist order.
And, you know, when you say to the socialists, well, you're going to kill people doing that.
Well, yeah, you know, in order to make an omelet, you have to break a few eggs.
They're very, you know, sanguine about killing.
I think so.
I wrote an article called Cane's Was a Vicious Bastard, which is the strongest language I've ever used in a headline, and talking about what he wanted and quoting from him to prove my allegation.
I think he was a destroyer, and I think he was smarter than his critics and also his followers.
I think he knew exactly what he was doing.
He was writing a communist manifesto of sorts, or a Mein Kampf, where everybody looks at it and says, how did anybody know that?
That's what Hitler wanted to do.
Well, he wrote it in a book.
That's how we could know.
Just nobody took it seriously.
Oh, he didn't really mean that.
Yes.
Or he did.
Yeah.
I want to read your article now.
That's good.
Yeah.
Keynes was a vicious bastard.
Right.
Yeah, I totally get that.
And of course, I mean, isn't Keynes the sort of founding father or the precursor to modern monetary theory, you know, the magic money tree and all that?
Yeah, I think...
And I've called MMT a cargo cult.
I think it's Keynes' ideas that are taken a little more consistently, taken to their logical end.
Well, if he believes that, why not take it all the way here?
Yeah, yeah, yeah.
And it's right, it's magical thinking.
So tell me, how is your company doing?
I mean, is it gaining traction?
Oh, yes.
So, in a way, I kind of think of what we're doing as an experimental lab for monetary science.
Right.
Right.
So I had all these ideas that, number one, interest is the force that pulls gold out of private hoards.
So getting back to what I was saying about London in the late 19th century, you know, it's a yield that pulls the gold out.
and a yield that allows the gold to circulate.
It's the regulator of flow.
And so the first thing I had to prove is that gold would actually come out for yield.
And of course, all the mainstream conventional people said, I don't get what you're trying to do.
It sounds like a bond.
But along with the coupon, you get a call option on gold.
Why don't you just buy a call option if you want gold and then buy Buy a bond if you want.
I don't get it.
And all the gold people said, no one is going to trust you with their gold.
The gold will not come out.
And I said, well, I'm going to prove you both wrong.
So that's what we've done.
And now that's absolutely definitively proven.
Yes, the gold comes out for yield.
People want to get paid on their gold.
It makes sense.
So economically, our account statement.
I was going to ask you, tell me in layman's terms how exactly it works.
Yeah, I mean, so if the interest rate is 3% and you deposit 100 ounces, then at the end of the year you have 103 ounces.
I mean, it's just like any other thing, only we're using gold instead of dollars or pounds.
You're talking about the real interest rate here rather than the official interest rate?
I was just talking about what you get if you put your dollars in a bank account and lock it up in whatever two-year CD today you might get.
I mean, as you say, some, some, I mean, say, say you're in Swiss francs, you're already in negative interest rates.
So, so negative.
Right.
Yeah.
So, so on gold at the moment, yeah.
I mean, okay.
So the people, it's not a great money spender, is it?
I mean, they're going to get, as you say, maximum 1% return on their, on their gold.
Well, outside of monetary metals, you're going to get a negative in gold because you'd have to pay to store it.
Yeah, yeah.
There isn't an interest rate in gold, really.
I mean, the banks are playing at something sort of like that, but it's not generally accessible to most people.
And the rates are very, very minuscule.
I mean, 20 basis points.
So the whole gold market has just been crashed along with everything else.
So part of what we're doing, though, is we're trying to energize a, I'll use a term that hopefully isn't too, or an anecdote that isn't too offensive to you British, but one of our first presidents, John Adams, was talking about revolution didn't begin in 1776.
So that had nothing to do with the revolution.
40 years earlier, revolution was a change in ideas.
You know, it's the ideas of John Locke and obviously Adam Smith and others that led to 1776 and the founding of America.
And it's how people think of these things.
If everybody thinks of the worth of their gold in dollars, we're not really making progress.
And so one interesting side effect of all this, obviously we print account statements for our clients every month, and the account statement is denominated in gold.
So you can see, okay, I have 100 ounces, but I've earned, year to date, 1.5 ounces.
So now I have 101.5 ounces.
And it's a paradigm shift.
It's really simple to express.
Don't think of the worth of your gold in ounces.
Think of how much ounces you have.
Don't think of the worth of your gold in dollars.
Think of how many ounces you have.
And I could say that, and that's really glib and easy to say, but then for somebody to see that in an account statement, it sinks in in a way that no amount of podcasts and writing and everything else can really create.
So people get it.
They're like, oh, it's about how much gold I have.
And then they're changing how they think about things in a way that I think is necessary and important.
And so we're an early stage company, but we're growing at an exponential rate.
We're getting traction.
Because the idea appeals to or serves a universal human need, people need to get interest.
If they're going to attain any of their objectives, whether it's paying for a child to go to university, whether it's to retire, whether they're in retirement and trying to live on fixed income such as it is nowadays, they need interest.
And speculating doesn't work.
So if I'm a retail punter, And I come to you, what are you offering me?
Do I come with, I say I've got 100 ounces of gold that I'd like you to pay me interest on, or do I pay you in dollars?
How does it work?
What happens?
Yes, everything we do is denominated in gold.
If you have dollars, we can broker, you know, you can trade that for gold through us.
But then once you have the account, it's in gold.
And do you have the gold physically in vaults somewhere?
Yeah, so we, you know, like most early-stage companies, you don't spend a huge amount of money building brick-and-mortar facilities all over the place.
We partner with a number of companies, including Brinks.
So that there's a vault, you know, we have a lot of we have a network of vaults around the world.
Yeah that you can bring it to and then from there we can work our magic on it and The interest and and so say okay, so your gold accumulates interest And that's for people who are worried in this in in these times about where on earth they can put their Put their resources, their assets.
And this is one of them.
There are several different levels.
I mean, the first level is, it's for people who need a return.
And they're not getting that return in conventional investments.
And in the dollar, we still have a slightly positive interest rate.
And in the pound, I think it's basically zero or negative.
And then in the Swiss Rock, it's definitely quite negative.
Yeah.
So, you know, what do you do if you need to try to make a return to get your retirement goals and they're not offering it?
Well, you can either speculate on the latest asset bubble.
You can buy properties at even higher prices on the hopes that someone will buy it from you later at an even, even higher price.
Yeah.
You can buy Bitcoin and maybe Bitcoin will go up.
And maybe not.
I heard a really fascinating quote, and I don't know who to attribute it to, but it isn't me.
And the quote is that in science, knowledge is an ascending spiral.
In finance, knowledge is cyclical.
Hang on, I'm being distracted by this bloody phone call.
Go away!
Oh no, it's so annoying.
Hang on, I'll get it again.
Hello?
Oh, mummy, I'm just doing a podcast.
I'll ring you back.
Lots of love.
Bye.
No worries. - Yes.
Tell me again.
I don't know who to attribute this quote to, and it isn't me, but the quote is, in science, knowledge is an ascending spiral.
In finance, knowledge is cyclical.
So we're at a point in the cycle right now We're at a point in the cycle right now where nobody thinks that Bitcoin could go down.
Yes.
And so, everybody believes it to be the safest thing in the world, store of value, they use that term a lot, and so forth.
And, you know, you almost have to say, look, I'm old enough to remember 2018.
2018.
It went from $20,000 down to like 3,000 I think.
So people lost the vast majority of whatever they put in.
So if you see that and you realize, hey, look, I'm 68 years old and I can't afford to have a wipeout with my savings like that, what do I do?
There's obviously some volatility in the gold price, but everyone understands gold was here 2,000 years ago.
It'll be here 2,000 years from now with some volatility.
In the meantime, I need to earn return and I need to be You know, either accumulating capital or at least living on the interest and not living on the principle.
Yeah.
And that's the first level.
The second level of investor we have, or client, is people who do see something's wrong with the world and that Monetary Metals is trying to head that off and avert that disaster.
And by participating, they're not only earning something selfishly for their own portfolio, but also You know, helping support something that is trying to make a difference in the world.
There are no guarantees on that, but... What if the dollar goes to negative interest rates?
Then are you going to start taking people's chunks of gold off them?
You know, like fractions of gold?
I mean, if you're tied to the interest rate, surely that's the logical...
Well, here's the thing.
The interest rate of each different unit of money is independent, in a way.
So that's why the dollar has a positive interest rate, the pound is zero or slightly negative, the Swiss franc is much more negative.
The interest rate in gold cannot go negative, because nobody will lend their gold that negative.
They'd rather just hold it.
Um, so I think that we will continue to be able to offer a positive interest rate, even when, uh, the dollar goes negative, you know, zero or negative at the end.
And also that's the end game anyway, when the dollar, when the dollar succumbs to the same disease as all the others, the game will be over.
Yes.
So, so how will you decide what the interest rate you, you, you, you, you, uh, provide on your, on your gold?
So very good question.
And getting back to what I was saying earlier about radical free markets, it's actually the investors who set the rate.
So we present an opportunity and say, here's this company and here's what they need, here's how much gold.
And the investors say, I'll put in this much gold at this interest rate or better.
And so it's the investors that are setting it in a free market.
And I believe we're the first time that a free market has set an interest rate since the foundation of the Fed.
Right.
Ever since then, the Fed nudging the scales one way or the other, usually downward.
Yeah.
And in gold, that's the reason why we moved off the gold standard, is the central planners can't really manipulate the interest rate the way they would like to.
Yes, indeed.
Just tell me a bit about the gold and the silver price.
Gold is quite unfashionable at the moment, isn't it?
It should be much higher than it is, I think.
It sort of feels to me like it ought to be higher.
I've got a friend called Dominic Frisby, who used to be a gold bug, but I think even he's had his gold buggery.
Exhausted by watching the yellow metal do nothing.
And even silver, you know, it shot up and then I think it went down again.
So is the market manipulated or what?
Why is this happening?
I don't believe it's being manipulated in the conspiracy theory sense of things.
And I've written quite a lot of articles about that.
And then showing the data to prove it.
Um, but I do think it's manipulated in a certain sense that if you go to Google Images and type in money, I want to see pictures of money, what you will see, I guess in the UK you'd probably see pictures of pounds, in the US you see green Printed pieces of paper or dollars, pages and pages and pages of different kinds of dollar bills, people with stacks of dollar bills in their fist, piles of dollar bills on the table and stuff.
Yeah.
No gold coins.
So, you know, from a very early age, from kindergarten or nursery school on up, the media, you know, financial regulation, reasonable and prudent standard.
They've trained everybody to think of the dollar as money and gold as a risky commodity.
Yeah.
And so I'm sure that is a strong disincentive to people to buying it.
But the countervailing force is everybody who looks at the paper currency and sees the rising risk and the diminishing return.
So let's go back to when COVID hit.
So pre-COVID, January of 2020, the 10-year Treasury paid 1.8%.
And, you know, there's X number of people that might have felt that was a good deal.
Um, and then at that time we were running a deficit of, as I said, 1.7 trillion a year.
Well, in the wake of COVID, the deficit is ramped up dramatically to maybe 5.5 trillion a year.
And the interest rate is crushed to 0.5%.
Yeah.
So at the same time they took most of the return out, they, or most of the reward out, they amped up the risk.
So if there's a risk return risk reward, uh, um, Equation or balance it just tilted dramatically in favor of get out.
Yeah, and so then people buy gold and Some of them some of them just waiting for the gold price to go up and some of them are sticky It's okay.
Now.
I just want to have some gold because this is nuts.
Yeah, and so what I think In the u.s.
I'm sure it's different in Asia and India But in the u.s.
When people and most people don't own gold here, but when they do own gold it's like Two to five percent of the portfolio.
It's a pretty small chunk of it, actually.
Yeah.
And they're holding that as an insurance policy or as a hedge against the end of the world or something like that.
But then if you say, look, we'll pay your interest on that.
You know, a lot of them will increase their allocation to gold a bit because now it makes sense to own more of it.
Yeah.
And so, you know, people are very sensitive to what their options are.
And to answer your broader question, why do people buy gold?
Because they perceive gold to be a better deal than either properties or equities or bonds.
And as the world continues to sour, that equation will continue to tilt further in favor of gold even compared to where it is now.
Yeah.
Yeah.
Obviously, from a business perspective, you're optimistic because...
Well, you've got to be, haven't you?
Otherwise, you wouldn't be in business.
You'd be prepping.
But personally, I mean, do you not think that this is the craziest times in history, economically?
We're in uncharted territory.
I mean, this has never happened before, has it?
What we're experiencing now?
I mean, my closest analogy is 476 AD.
So, yeah, I do feel like we live in about 470.
We're talking about the fall of Rome.
It's not quite collapse of Rome.
That's right.
And, you know, we're not quite there yet.
It's not one year out.
It might be five or 10 or 15 years out, but somewhere in that, you know, nobody can predict exactly how fast it happens.
Adam Smith said there's a great deal of ruin in the nation.
We're seeing that they can get away with destructive policies longer than one might think.
But yeah, I mean, this is horrific times, and I'm just reminded that, supposedly, the Chinese character for threat is the same as the character for opportunity.
Right.
And, you know, so as an entrepreneur, I'm optimistic.
First of all, all entrepreneurs are optimistic.
If we weren't optimistic, we wouldn't be entrepreneurs.
But as somebody who's trying to You know, first of all, make a profitable business, but also make a change in the world.
I am optimistic.
I think what we have makes sense and it's resonating with people.
And, um, but at the same time, of course, I'm aware of the backdrop of, you know, catastrophic and destructive things that are going on.
And of course, COVID accelerates it because You know, the real root of the problem, I mean, behind the debt, the story is capital consumption and capital destruction.
And they destroyed incalculable amounts of capital by locking people down.
Yeah.
You know, businesses were shut.
You know, I guess the central planners think that you could just press pause, like the economies of VCR.
You just press pause.
And then, you know, when you're ready and, you know, the virus is all gone, then you press play.
And, of course, you're playing with people's lives and you can't do that.
And all these businesses and all these buildings and all the equipment you keep and it rusts and it, you know, it has to have insurance and some minimum electric bill and skeleton.
Yeah.
So everybody who survived has survived by incurring more debt to pay their expenses while they wait.
So the debt just continues to accumulate, the capital continues to decumulate, and when you get to the end, then that's the end.
So I am aware of that backdrop, but what can I do other than wake up every day and focus and have hope that I think somebody was talking about Jericho and the theme was hope without guarantee.
And that's kind of how I feel about all this.
Right, okay.
Well, yes, that probably is about as close to optimism as we can afford in these times.
I think you're right.
Out of interest, I mean, you've presumably got loads of money.
Have you got a kind of escape plan?
Do you think about that at all?
About where you'd flee to or what you'd do?
I had looked in a variety of places.
including the South Island of New Zealand.
Yeah.
It's almost ideal because all the water you would need falls out of the sky for free.
You can't live in an arid zone.
We're talking about the collapse of the electric grid.
But I concluded that I mean even if everything went according to plan and you survive the initial apocalypse.
Yeah.
And roving bands of hungry desperate people.
Yeah.
You survive all of them.
And what are you emerging into?
You're emerging into something that is at best An 18th century agrarian society.
Yeah.
And in a society like that, you earn a bare subsistence living by 14 hours, six days a week of backbreaking labor.
And that's a young man's world.
I mean, life expectancy was 35 to 40.
I'm already past the end of my shelf life.
So I wouldn't, not only don't I think that world would be very enjoyable to be in, but I wouldn't expect to survive very long in it anyway.
And not because of either hunger or because of war, but just because life was very hard.
So I looked at that and I said, you know what?
I don't want to go all in building the perfect creper hidey hole.
I want to try to avert this disaster rather than play into, as I say, be a roach under a rock, surviving it.
I want to avert it if I can.
Yeah, yeah.
I've been thinking along similar lines.
I mean, I'm in touch with various kind of prepper types who are planning to go off grid and stuff and, you know, they've got their chickens in place and they've got their land.
But actually you're right.
I mean, the things that you'd require, what do you need?
You need guns apart from anything else.
You need lots of guns to protect yourself from, which we don't have that option in the UK.
We really haven't got, you know, the bad guys have got all the guns.
You can just imagine the kind of people from the inner cities with their automatic weaponry used to protect their drug trade.
They become like warlords and they'd go around the country kind of killing and raping people.
and you know to be at the odd farmer with a shotgun but it wouldn't be much it's yeah it would almost be better to be killed wouldn't it in the first in the initial in this initial breakdown because there's there's you know Even if you survived that, I would ask folks, okay, what would happen if there was no longer an outside world?
You couldn't go to the store and buy chicken feed.
You couldn't buy diesel fuel.
You couldn't buy parts for your tractor.
Your electricity turned off.
Your well stopped running.
What would you have to do to survive?
You couldn't buy seeds.
Yeah.
There's no fertilizer.
There's no insecticide.
All those things go away.
How would you eke out some sort of living in that environment?
You realize just how hard life was.
Even assuming there wasn't gangs and warlords making it worse, which of course there would be, But even assuming you didn't have that, you found an isolated area where they didn't come that far.
Life was very, very hard.
And if the frost came early that winter, you lose your crop.
You're not going to eat very well.
So, before we go, because I think we've covered a lot of ground there.
You sort of hang out with people, with like-minded people in a, you know, with similar understanding of financial markets and with money and ideas.
Is the consensus among your acquaintance that it is possible to get out of this death spiral that we're in?
I mean, I like your optimism, but do people share yours?
Well, I mean, as you say, you know, everybody to some degree is a filter and a magnet for like-minded people.
And the stronger your personality and bolder your ideas, and the more that you write publicly, then that tends to be a stronger Filter and magnet.
So I've tended to attract like-minded people who, of course, do agree.
And I've been very fortunate, so we're an investor company, and I've been very fortunate that investors have been very supportive of what we're doing and made the whole thing possible.
But, you know, does that give you or anybody a comfort level that, you know, we're going to be successful?
I don't think there's any way of knowing that.
All I can say is that we're past all the early risks of like, is the idea going to work?
Is there a customer that wants this?
Can we find that and service that customer economically?
We've answered those questions.
The answer is yes, we can.
We have a business here and the business is growing and we're doing all the things to make it grow and it's pretty, our path from here is pretty straightforward as a business.
Will that be essentially big enough, fast enough To move the needle of the world is the question.
I certainly see the case for the negative.
I've written some very bleak pieces myself, so I hate to say what's the best of them, but maybe that is the best term for it.
But at the same time, I do see I do see some signs of hope, and one of which is that there's a great deal of ruin in the nation.
We're not as far advanced into the death spiral here in 2021 that I would have thought, you know, back, let's say, when I was awarded my PhD certificate in 2012.
Nine years later, You know, life is still pretty good.
Life is still going on.
And I wouldn't necessarily thought it would be that long.
Right.
So yeah.
Yeah.
There's the balance.
But, you know, the thing with it was the thing with a high growth startup on the Internet is that when you have all the elements in the place and you can really feel that hyper growth, companies can go from zero to Google or zero to Facebook or zero to Uber, you know, relatively quickly.
And in our case, I think the gold standard is when we scale up.
So can we scale?
We can scale.
Can we scale fast?
Well, there's lots of signs that lots of other companies that came before us scaled at the kind of rate that one would need to scale to do it.
Can we do it?
Well, that's going to be a test of my mettle as an entrepreneur and our team and our vision and everything else.
But I do feel hope.
I mean, I don't go to sleep You know, crying every day.
Good.
I go to sleep exhausted because I've spent all my energy working on productive things, and then I run out of hours in the day, and, you know, I need to lay down, but... I don't know if I can give anything more than that.
Keith, it's been really good talking to you.
I so hope you're right and I really wish your company all the best.
I hope you do succeed because it sounds like you're on a good mission and we need people on good missions right now.
I'd just like to remind people, if they've enjoyed this podcast, don't forget to support me on Patreon and Subscribestar.
Unlike you, Keith, I'm absolutely sodding useless at business.
I'm just unbelievably bad.
And I'm quite good at creating good product, but I'm not very good at monetizing it.
And so please, people, remember to rescue me from my own incompetence and support me on Patreon, Subscribestar, or go to dellingpoleworld.com, where you can buy special friend badges and things to support me.
And Keith, I hope your company does really well.
So thanks very much for being a great podcast guest.
And let's hope the apocalypse doesn't happen.
I hope so too.
Very, very fervently.
Okay.
Thanks a lot.
▲
Export Selection