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Aug. 27, 2024 - Ron Paul Liberty Report
20:59
🚨Gold Market Alert! Birch Gold Specialist Phillip Patrick Predicts Impact of Fed Cuts

In this special episode we analyze the economy, with chief economist Phillip Patrick from The Birch Gold Group.

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Election Impact on Jobs 00:10:37
Hello everybody and thanks for tuning in to the Liberty Report.
Today we do not have a co-host but we're going to have a special guest.
We'll be introducing him in a minute.
We've also had a little bit of weather in Texas as usual.
But we're ready to go and we're going to be talking about a special subject that we talk about all the time and that is on gold.
But we have as our special guest Philip Patrick who is the chief economist at the Birch Gold Group.
And guess what we're going to talk about today?
We're going to be talking about gold because it's in the market.
But first we're going to welcome Philip to the program.
Philip, welcome to the program today.
Thank you for having me, Dr. Paul.
Okay.
Very good.
You know, there's a lot in the news right now about the markets and gold.
There's an election going on and that's playing a role.
The markets, you know, are amazingly strong considering the fundamentals.
The fundamentals are horrible, but they still plod along.
And yet we noticed that just recently at the meeting that where Powell was, he was showing some worries because all of a sudden the announcement, shifting gears.
And that's what I want to start off with, Philip, because the whole thing about his shifting of gears, shifting of gears on monetary policy.
And all of a sudden, oh, we've got a lower interest rate.
And that's usually a sign that he's worried about something.
And I wanted to get your opinion on what you think this means, about shifting gears and now all of a sudden saying, well, inflation, the markets aren't too bad.
We have inflation under control and the employment statistics look good, which is all fudging, if not lying, you know, to us.
So how do you assess this whole thing about it looks like they're going to be lowering interest rate even a little bit more than they even hinted a little while ago?
And if there is a reason for it, do you think it's going to do any good?
Yeah, I mean, great question.
So first of all, I think that Powell now, well, he said in no uncertain terms, the time has come for central banks to start begin to lower interest rates.
And I don't think it's a big surprise.
The betting markets had already indicated 100% likelihood of a September rate cut, either 25 or 50 basis points.
I think that's the only question remaining.
But, you know, why now?
The excuse, of course, is that inflation has mostly gone away.
But I would say that is true, but also misleading.
Let's not forget inflation is still 50% above the Fed's target.
Is that close enough?
I think probably not.
But what we saw was a slight uptick in unemployment.
We had numbers being revised down quite heavily, about a million jobs in nine months.
And the Fed is now clearly more worried about recession than they are inflation.
And quite frankly, they should be.
But the problem is that over the last 11 recessions, the Fed interest rate cuts have come after the recession has already begun.
So even if they do cut rates in September, almost everyone agrees will be inevitable.
It's almost certainly too late to prevent recession.
And I can't imagine we're not going to see an uptick in inflation if they continue down that path.
So I don't think it's going to have a dramatic effect.
And it may cause bigger problems with inflation longer term.
Yes, and sometimes you can't measure the price inflation, which is a little bit different than the monetary inflation.
So you can have monetary inflation, you know, six months, two years, three years ago, but you don't know when it really has done all its damage.
Sometimes it takes a while for that money to circulate, and they can't possibly predict exactly where the effect's going to be.
All prices will not go up evenly.
It's not a very good planning system.
So that's one of their problems.
So people who are right now complaining about the prices in the grocery store, they think it's immediate.
And there are immediate problems.
They do produce a lot of regulations that makes things worse.
But they don't understand that what was done maybe 10 years ago, it filters through the economy.
And we live in a different era.
And so this management just saying that, oh, the Fed's going to have an announcement and everything is going to be okay.
But, you know, over the years that I've watched the campaigns and the financial markets, you know, presidential elections have always been real important.
And they try to make them real important now because there'll be a big difference and they'll be up and down.
But when you look at deficit financing and the foreign policy involvements that we have around the world, for some reason, I just don't have the feeling that things ever have changed over my observation of several decades.
What do you think when you hear these things that, you know, we just get this guy in, things are going to be so much better than this other one's.
But you can't help but thinking, well, sometimes you can spot somebody that's going to make things a lot worse.
Do you find this is pretty difficult to make your assessments in the economy when we don't know exactly how the market's going to react and who's going to win the election and who really win the election?
I think it's sort of up for grabs.
What do you think?
Yeah, I think it's definitely up for grabs.
This is the closest election I think we've seen in quite a long time, and I think it'll continue to be so.
I think the economy will be a central talking point for both candidates.
I think it's a big topic come November.
Look, which direction?
No matter who wins, we've got a very tough job in front of us, right?
We know what we're going to get from another four years of essentially a Biden administration.
It implies more deficit spending.
Cambla appears to be following suit in that respect.
But we look on the Trump side, and obviously there's tariffs and other things which can also be inflationary.
The reality is no matter who gets in, we have a tough storm to weather.
Some of Trump's policies, I think, are interesting, right?
Opening up pipelines, onshoring manufacturing, again.
These things take many, many years, if not decades, to really materialize.
So I don't think we'll see the benefits of those policies for a long time.
But the reality is no matter who wins come November, I don't see a soft landing on the horizon.
It's just a case of, you know, how rough it'll be, I suppose.
You know, when Powell was making his announcement, he was talking about a, quote, victory over inflation.
And that's where they should and do lose credibility when they make these statements.
Because, like you say, there's a lot of problems out there that's not going to be magic and change all the things that lead up to this mess.
But the other problem is they make these pronouncements.
We're going to do this ABC because we put it into the computer and the computer tells us this is what's going to happen.
Well, those predictions essentially don't work very well.
They're not really part of the market psychology.
But they still can make these pronouncements, so victory over inflation, and yet they're, in order to justify the fact, we'll start acting like it.
Because I think the Federal Reserve and the authorities that we have in Washington are always a little bit more, if not a lot, more concerned about deflation and depression.
And they're not going to allow that to happen.
So when I see them messing around and jumping the gun and saying, well, we've solved our problem of inflation, and that's why they're going to resort to this.
But it brings up the subject of when can we believe them?
Take for instance, Philip, about this report on the employment.
You know, they sort of had to confess, well, it was close to a million people that we overcounted the jobs.
But what if they did count them?
And then what kind of jobs are they?
Are they government jobs?
Are they part-time jobs?
Are they people just being re-employed?
This sort of thing.
So I don't know.
I would think you have a pretty decent job to try to sort out.
You know, you have to deal with the statistics and what the people are going to think about it.
But really and truly, knowing what is true and isn't.
So I think that it really puts a lot of pressure on the economists trying to figure this out and also on the political people who have to keep fibbing to us to perpetuate the lies.
I mean, I agree vehemently, and I think the people realized it, right?
We've been told by the administration for the last couple of years how great the economy is, how inflation's coming down and GDP's up.
And, you know, the reality is it hasn't felt like that for us as individuals.
It hasn't been our reality.
And like you said, the numbers have been revised down aggressively, right?
A million jobs.
They overstated job creation essentially by 30%.
Now, the keystone of bidenopic accomplishment essentially just vanished before our eyes.
Now, you mentioned the issue as well.
Look at where the job growth came, right?
It came in two sectors, right?
Government jobs and healthcare.
That's it, right?
De-Dollarization and Gold 00:09:34
This isn't sort of a broad boom.
This is coming in one sector and it's paid for by deficit spending, which is ultimately just inflationary.
So I think it's a big problem that we can't trust the numbers.
The Federal Reserve have said time and time again that they're data dependent and they're acting based on the data.
Well, if the data is this far off, it's a problem.
Yes, and you know, there's a lot of people watching our program, and most of them are probably investors to some degree in gold or thinking about it seriously.
But a lot of people will say, well, is it too late to do it?
You know, gold is $2,500.
Is it still a good time?
How do you answer that?
I think you partially answered it just a few minutes ago, but to say, well, you know, this might be a good time to just take a rest because this might be maybe the dollar price of gold, the ratio, has changed so much that gold is not as an important haven as it might have been five years ago.
I mean, look, I would say it's more important today than it's ever been, at least in my lifetime.
So to talk about gold and current pricing, so first of all, we are close to all-time highs in terms of a number, a nominal amount.
But in terms of value, we're way off all-time highs.
I mean, the real highs in gold came in January of 1980.
Gold hit $850 an ounce.
If we were to adjust that to inflation, that would be the equivalent of around $3,300 today.
So I think we've got quite a lot of scope to move just to be back at inflation-adjusted highs.
Then we look at what drove gold to the highs in the 80s.
It was a climate of stagflation, one of stunted economic growth coupled with inflation, very similar to the one we're in today.
But I think there are some key differences today.
Number one, the options out there are limited.
Back in the 70s, you could beat inflation, keeping your money, your cash in the bank.
That option today, at least real inflation, has disappeared.
The second and bigger issue of the two, and you alluded to it, the U.S. dollar was the king in the 1970s.
And today, that position is slowly changing around us.
We are dealing with de-dollarization around the world.
I think that will escalate.
And ultimately, that bodes very, very well for gold prices.
As you know very well, Dr. Paul, gold's prices are simply a reflection of the dollar's value.
And if the dollar continues to slide, the sky's the limit for gold prices.
You know, I find that interesting because not too many people use a reference that you did, and that is the $800 in 1980, because indicating that may have been the real value or, you know, a hit of what's coming.
But markets are not, you know, you can't predict them.
They don't go smoothly.
You look at a couple of statistics, put it in the computer, and you draw a line, and this is where things are going to go because there's a lot of people buying and selling and a lot of effect.
And sometimes they overreact.
Like I think most of the time they do react and the market calms it down.
So $800 probably at that time might have been telling us about the future and a gauge for the future, but it still wasn't going to last for a long time.
So it took a long time, even 20 years of that softness for gold.
But that I think is something that is so important.
But gold then was probably overbought at 800.
But what was it at the turn of the century, the year 2000?
It went down to under $300, which is amazing.
And so this whole thing about is it still too late to buy gold and this sort of thing.
But I thought your answer was great for that because of the circumstances and the uncertainty is what we have to deal with.
And the people who want to protect their wealth, that is what they have to do.
I want to mention one other thing just to emphasize this business about gold.
You know, it was in the news this week.
Somebody made the calculation of what's the value of a 400-ounce gold bar.
And that, you know, as now 400 ounces times 2,500 takes it up to a million dollars.
And that was sort of a high watermark.
But I think it is.
And I agree with you.
I think the conditions are worse.
And as bad as they were over those early years in the last several decades, I do think the conditions and the condition of the dollar and the political system is much worse.
So this to me is something that we have to work with.
And also, I'd like you to talk a little bit about Birch Gold because that's what you work for Birch Gold and I work for Birch Gold.
I partner with them and we try to get more people protected and not say, oh, it was up too much this week.
I'm going to wait till next year.
And I don't agree with that philosophy.
If people have investment money and they have no protection and they need a little more, that's when I think they should consider buying gold.
What do you think?
I agree vehemently.
And for us at Birch Gold Group, the key is information.
It's why we love coming on shows like yours that inform people because with information, I think comes power, comes knowledge.
So for your viewers, it's very simple.
All they have to do is text Ron to 989898.
Again, Ron to 989898.
And what that will do is to give them access to a free information kit on why to buy precious metals today, talking about things that you and I have discussed, but also how to do it.
For those with the retirement account or cash sitting in a bank that's losing to inflation, we can show them how they can move portions of retirement account or cash in the bank and protect it with physical precious metals.
So information is key.
I think the problems can be daunting, but the more understanding you have, the more solutions start to present themselves.
And we start to realize we can get through almost any financial climate just by being preemptive and being in an asset class that is conducive for the climate.
And I think today, precious metals do have an advantage.
Yes, and I think the more, the merrier, the more people who are protected, the better off all of us will be if we're into conditions where survival is the big issue.
And I believe that's a possibility.
But if you have more people involved, that's helpful.
But we also have to contend with another issue that I deal with a lot as well, and that is dealing with our personal liberties.
What is our government really doing?
Because that's what we're talking about.
The result of bad government that has reflected the ability to get the people generated to support all wars and all welfare.
And the deficits don't matter, which comes from Keynesian-type economics.
And we've been following this.
So my say is invest and protect.
And the more we can get involved, the merrier.
But we also have to spread the message of protecting our liberties.
And I think that is so important because just remember, I keep reminding myself, and nobody wants to think about this, but what was the first thing that Roosevelt did?
I don't think, you know, we're going to have problems and they're going to be worse, but I don't think they'll do what Roosevelt did, and that was confiscate the gold.
I think the American people are a little more sophisticated.
And that'd be sort of like saying, wake up some morning and some person said, all guns have to be turned in next week.
That's not going to happen.
But I think the principles of liberty, Emphasizing what the founders had made a sincere effort to deliver to us in our Constitution.
I like to think I hope everybody does well, and I hope they think that it's fun and it's also worthwhile for everybody to promote the cause of liberty.
And if you'd like to make one more quick closing comment, that'll be okay, Philip.
Look, I agree vehemently with that, and I think, you know, certainly Birch Gold Group and your philosophies are very much sort of in line.
I think precious metals allow for an element of privacy.
I agree with you, by the way.
I don't think a gold confiscation fits in a modern economy, number one, because the people I don't think will accept it, but also it doesn't achieve what it does for the government today.
Doesn't Achieve Much in Modern Economy 00:00:29
It doesn't really achieve a great deal for them in a modern economy.
So, again, I think everybody should be looking at precious metals in climates like this, in particular because of the nature of our problems.
And like I said, once you understand the issues, the solutions present themselves.
And once again, Philip, I want to thank you very much for being with us today.
And to our viewers, thanking them for tuning in today.
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