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Oct. 18, 2024 - Ron Paul Liberty Report
26:13
Gold Hits Record Highs! Expert Insights with Phillip Patrick | Birch Gold Group

Join Phillip Patrick from Birch Gold Group as he dives deep into the recent surge in gold prices, reaching historic highs. In this insightful discussion, Phillip shares expert analysis on what’s driving the market, how gold is performing in today’s economy, and what this means for investors. Don’t miss out on crucial information that can help you navigate the precious metals market during these unpredictable times.

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Economic Policy and Tariffs 00:12:52
Hello everybody and thank you for tuning in to the Liberty Report.
With us today we have a special guest returning once again to the Liberty Report.
His name is Philip Patrick.
He just happens to be the top economist at Birch Gold.
And very appropriately, this is a good time to talk about gold.
So Philip, welcome again back to the Liberty Report.
Thank you for having me, Dr. Paul.
And I'm sure you have kept an eye on what's going on.
But there's a lot of things that contribute to the price of gold going up.
And you and I have talked about this very often.
Yes, the price of gold is going up, but we have to remind our friends out there that are looking at this issue that the real way to describe it is why is the dollar going down in value?
Why are these other countries thinking about what are we going to end up with competing with the dollar?
So that is, I think, important.
And I think, Philip, it's so important that we do those definitions and why it makes a big difference on policy.
Because quite frankly, I am a little bit skeptical of the whole mess in the election this year, although I am.
Certainly I see the difference in many areas.
But when it comes down to spending and inflation, I think both political parties have a bit of responsibility for this.
What do you say?
Yeah, I agree vehemently.
I think this is a bipartisan issue.
I think both sides of the House have been pushing spending policies.
I think the Democrats over the last four years have taken it to a new level in terms of spending.
And looking at the tax plans, I think Camera is pushing more spending, right?
But Trump's policies are also inflationary.
If we talk about tariffs, right, 60% tariff on goods from China, that's going to push prices up across the board.
So I think we have tough times to weather no matter who gets in.
But I would say there needs to be a lot more focus on the spending.
If we look at Tamla's tax policy, for example, raising taxes pretty much across the board, the idea being to generate revenue.
Well, her tax plan is estimated to generate about $900 billion over the next 10 years in tax revenue, which isn't insignificant.
However, two things to mention.
Number one, her tax plan comes with consequences, right?
It'll cost about 2% in GDP and potentially a million jobs, right?
And that's according to the independent tax agency.
So it'll come with plans.
But here's the important part.
Look at the mess from spending.
Today, this year alone, on the $35 trillion of debt, we're going to have about $950 billion in debt service payments alone.
So, you know, the question is, why are we not addressing the spending?
We're stepping over dollars to pick up cents, essentially.
Right.
You know, and I'm glad you brought up the subject of tariffs, because if every time they said tariff, if you called it a tax on the middle class, maybe they'd look at it a little differently.
Because I see it, I see it actually as a economic liberty issue, too, because I claim that when you start putting tariffs, and some companies will get a tariff bigger than others, and you know, it's it's management of the economy by this method.
But I and sanctions and all are the same principle.
But it's the people's money, and if you start manipulating that, you will manipulate it where some products for some people will go up more than others.
But I think what surprises me most on this, Philip, is, you know, I'm sure you have seen the shift right now.
You know, it's not a party thing.
It's bipartisan.
Superficially, it looks good.
Oh, you know, this company's going out of business.
And the foreigners are undercutting us.
But they're doing it.
They're cheating and they're doing this and all.
So why don't we make sure our consumers pay a lot more money for these products?
And maybe that'll be the solution.
So I think I've been amazed because looking maybe 20, 30 years ago, it almost was a bipartisan thing that people accepted the fact that tariffs weren't a good idea.
And yet right now, I noticed that both parties are endorsing these tariffs.
Have you noticed that at all?
Yeah, and a lot of the tariffs that Trump put in place, Biden kept in place.
So I think they were looking at it from a revenue standpoint, saying it was attractive.
But I agree with you generally.
I think tariffs are anti-competition.
They become retaliatory and ultimately drive prices up.
China are not going to be paying the tariffs.
It's the U.S. consumers that will be paying it.
I think the concept is to revitalize American manufacturing longer term, but there's going to be a significant cost short to medium term.
So I've been saying for a long time, no matter who gets in, we have a very tough storm to weather.
We have $35 trillion of debt, more debt than has ever been held by any nation in history.
We have a world currently running away from the U.S. dollar on the back of both devaluation and, of course, weaponization sanctions, which make the dollar less attractive on a global scale.
And, of course, the petro-dollar agreement with the Chinese is now under threat as well.
Chinese have shown that the Saudis have shown a willingness to sell oil in Chinese yuan, really breaking that petro-dollar agreement.
So I think we have tough times for the dollar ahead.
And if we don't curb spending, it may be at the point of no return.
They do a lot of talking about it and referencing it, both Republicans and Democrats.
And they talk about changing a policy that seems to solve the problem.
You know, a subsidy or a tariff or something like that.
But you don't hear a whole lot.
To me, it's a lot different than the sentiments that were heard daily in the 70s, because the 70s, the decade of the 70s, were really rough after they finally closed the gold window.
And that made a big difference because people were directed toward the money supply and what the Fed was doing.
Now they don't really talk about the money supply.
They talk about interest rates, but not the way an Austrian economist talks about interest rates.
An Austrian economist looks at interest rates as being a culprit.
Yes, it's good to have low interest rates.
It's good to have a healthy economy.
It's good to have people making a lot of money, buying stuff, and saving something.
And savings would dictate an interest rate, which would help people decide what to do, whether they're going to purchase things later on, or would they save, or would you open up a business?
But what has happened now, they at least talked about that back now, but now they don't talk about that at all.
I mean, how often do we hear, oh, M2 just went up so-and-so?
What are they really proud?
They will talk a little bit about deficits, but not a whole lot.
They'd like to avoid it.
They never say, where are these things?
I'm always tempted when I hear some of these baits going on.
If I was involved, I say, well, what are you going to do about it?
And if somebody will say, well, you have to spend the money.
I would always say, where are you going to get the money?
But nobody asks the question and nobody cares because, oh, I'm forgetting the money.
And you have the far left's way of getting money.
And you have the other, the populist way of getting money.
But it's not dealing with something.
And of course, I have, and I know you're very interested in what the Fed's doing.
Because ultimately, the Fed is the guide on the market and usually is responsible for both the booms and the bus.
Yeah, absolutely correct.
And look, I just don't think they want the public having these discussions.
And you hear it occasionally, but generally speaking, not.
And I think, you know, this is where politics and economics cross and they create a mess.
I mean, the ability to print money, to play with interest rates, to drive the economy up has become a very important political tool.
And I don't think they want to let that power go, right?
If you're a president starting a new term, you're walking into a recession.
You could do the sensible thing, which is austerity, tighten the belt bucket, the belt buckle, sorry, and sort of make the tough decisions and weather the storm.
The problem being that doesn't typically lead to re-election.
So the ability to print money, kick the can further down the road, has become a very important political tool that these guys use.
But I think it's largely why we have the problem that we have today and the scale of the problem we have today.
You know, Kamala is anxious to explain her way of doing it.
And she frequently will use the term, we've got to stop the gouging.
You know, so therefore it goes to the businessman.
And this to me obviously is not a solution.
But I'm sure you must have heard these things and heard her all the time.
Well, it's all the businessmen's fault.
Matter of fact, they don't include, but they infer, well, it's the labor unions.
But are the labor unions looking for a higher wage to compensate for the inflation that has come for the various reasons?
Or are the labor unions, you know, a participant in this?
But to say, well, we have to, in the 70s, they put the wage and controls on everybody, even labor unions, doctor fees, everything else.
And it was such a disaster.
It didn't last long, but a pretty stupid economic policy.
But they still talk about it.
Yeah, price controls have never worked.
You can look at the Soviet Union.
You can look at Nixon in the 70s.
They just don't work as a policy.
I'll tell you what fixes price gouging.
It is competition, right?
And this is how we've grown to become the country that we are.
And we're sort of going back on our principles.
But the problem, I think, with Kamala's economic policy is it's just not really been thought through.
It seems to be full of taglines that some marketing intern has come up with.
It doesn't seem like sound economic policy.
It seems like essentially looking to buy votes.
They're looking at where they can pick up votes, what would please that sector, and they're just saying it.
So it's concerning to say the least.
But price controls have never worked.
It is not sound economic policy.
You know, the Fed, the U.S. Fed has revealed, we have to give them credit for at least not hiding it completely.
They revealed that two and three of my American households, you know, are living paycheck to paycheck.
But when you look at the markets in general, there's a lot of wealth out, trillionaires and whatnot, but there's a distortion, which is characteristic of a fiat system.
Some people get to use the money and make more money than the people who are on the tail end, and they get the price increases.
But there's a lot of people that are suffering.
But there was another statistic, I think it was on a Fed report, that showed in the stock market, you know, stock markets skyrocketing.
How are they managing that?
People don't see any sign of bubble.
But it turns out a large number of our corporations and businesses aren't making much money.
They were even making a lot less or they're losing money, but they don't talk about that.
It's popular to say, well, look how great the stock market is.
You know, this is the solution.
So again, I think that's, you know, once again, something to just show, deceive the people and lull them to sleep and put up with the Fed, send a message to the Congress, keep spending.
Average Joes Buying Gold 00:12:18
And it doesn't matter if you haven't spent enough here at home on the hurricanes.
Why, we'll just send the money off to fight some stupid war someplace.
I mean, I agree vehemently.
And it's a problem.
Most Americans are getting hit.
I saw a report last week that a record number of Americans who are having to work more than one job to make ends meet.
And the majority of Americans earning over $100,000 a year are living paycheck to paycheck, which is an absurdity.
But I think what's becoming increasingly clear is that the U.S. economy is splitting, right, between the wealthiest households whose net worth is invested in assets and, as you point out, who are doing rather well, whether it's being driven by fundamentals or not, and everyone else whose net worth is in their paycheck, and they're getting crushed by rising prices and slower growth.
At the end of the day, inflationary pressures push all prices up, not just food and fuel, but real estate, natural resources, and commodities.
So I think the key to thriving in environments like this is to avoid debt and preserve purchasing power by owning tangible assets.
And I think that's largely why we're seeing this big split.
You know, for a period of time of over 40 years from the Depression on all the way up to 1971, Americans weren't even allowed to own gold.
But the dollar still was connected to gold internationally.
If we spent money overseas and bribed people and bought stuff, they ended up with dollars.
But we had it to convey confidence is that if you turned in dollars to the Fed at $35 an ounce, we'd give you an ounce of gold until finally Nixon had to close the gold window.
But in a way, it changed the definition of the unit of account.
At that one time, it was $20 an ounce, and it was $35 an ounce, and then $42 an ounce.
But that broke down.
And just think of what's happened since then.
It broke down.
I think it's so important that we once again think about defining the unit of account.
It would solve a lot of our problems if you had to maintain this.
But right now, today, people are seeing the consequence of the problems we've been talking about for a long time.
And that is, what are we seeing to defend our position?
Well, it's easy to say, well, the gold price is going up, gold price is going up, but maybe they've messed around and created more dollars because there's no definition to a dollar.
And that is the problem, the depreciation of the dollar, purchasing power, prices are going up, and there's chaos in the streets.
And I just think if it continues, much more serious economic problems will evolve.
I mean, I couldn't agree more.
And, you know, it highlights, I think, what's happening with the petro-dollar agreement.
As you said, up until 1971, U.S. dollars were redeemable by foreign governments.
So essentially, they had intrinsic value, and there was global demand for the dollar.
Obviously, after 1971, U.S. dollars were no longer redeemable.
So the big question was, why would the world want dollars, right?
Nixon struck what was a smart deal with the Saudis and said, look, in exchange for protection, you're going to guarantee that any oil coming out of OPEC is always sold in U.S. dollars.
Given that 40% of the world's oil supply came from OPEC, it guaranteed a consistent, long-lasting demand for the dollar.
Well, the petro-dollar agreement is cracking.
So, you know, demand is starting to wane.
Plus, right, the key to the dollar's position for such a long time has been stability and strength, right?
There are no other currencies that can compete.
We're starting to see that wane as well by increasing supply.
We're seeing the value of the dollar drop, right?
And now we have this issue, huge supply and waning global demand.
And that never bodes well.
Look, any student of history, as you know well, understands that global reserve currency status circulates throughout history.
It was Great Britain before the U.S., Portugal, Spain, France.
The average length one nation holds it is around 90 years.
And we're coming up to that time now.
Now, the only thing saving the dollar on the international stage is that there isn't a currency yet that can usurp the dollar, right?
The dollar is the best of a bad bunch still, but that's where gold's coming in, particularly for the BRICS nations.
They're using it as a vehicle to de-dollarize.
They're dumping dollars and buying gold.
And it's achieving two things for these countries.
Number one, gold today is a better trade than the U.S. dollar.
It is increasing as the dollar is falling, which, of course, it always does.
Second is this.
The more gold they buy, the less reliant they become on the dollar, which weakens our ability to sanction and other things.
So I think we're hurtling down a very concerning path.
And I think it highlights the spending discussions that are happening in Congress.
If I'm a foreign government holding U.S. dollars and I'm watching the U.S. running a $2 trillion deficit on an annual basis, it's not responsible accounting, and it starts to become a problem.
You know, one thing that's interesting now is what's happening with the buying of gold, the average person buying gold.
And in the 30s, I don't think the average person was loading up on gold.
And then there wasn't so much resistance.
But I think conditions are different today.
I think people, a lot of average people are buying gold.
When you see somebody's doing well at Costco selling gold bars, you know that the average person is looking for protecting themselves.
And that, to me, I think is a good sign.
So more people involved, I put it in the category of the more people that believe in the Second Amendment and have a gun in their house, the better off the country is.
And then more likely there will be the people who would defend the Second Amendment.
And now there's going to be more people who are understanding gold.
And it is a little tricky because in the early part of a boom period with an inflationary surge can fool you.
Things might do better for a while because, you know, people don't know how much money is out there and it hasn't been identified to push up prices.
So there's an increase in productivity at the beginning.
The market seems to be working, but eventually then it gets to a point where the product, see, the productivity will keep the prices lower than theoretically you could argue.
Well, we're printing a lot of money and the prices don't seem to have gone up.
But all of a sudden, then they start to go up.
So there are lags.
You can't say, last month the Fed did this.
Next month we know what it's going to do to prices because there's a subjectivity involved in this.
But we do know that there are some very true things.
One thing that people should realize, if the government has debt and they're a lot of print money, they will.
And if they do that, you can expect what you just described, Philip, is everybody's going to have to be dealing with this because more than one price will go up.
It'll be a general price level.
So I think the deception that I'm talking about is productivity is a vehicle.
But it can't be the solution.
Because after a while, there'll be just too much cash and the investments will be overdone.
There'll be malinvestment and interest rates will be pushed up for various reasons.
Then all of a sudden, the market, not the politicians, the markets demand a correction.
And that's what I think we're witnessing right now.
Yeah, I mean, I couldn't agree more with that.
And, you know, it's not the act of printing money that causes inflation.
It's that money running through the economy and competing for goods and services.
And as you say, there is always a lag.
The other point you mentioned, I think, was important as well.
People are waking up.
The American public are waking up.
The individual investor is now looking at precious metals.
And it is encouraging.
But I think it's because of the problems that we have, right?
And I would say, look at gold last century, right?
If you compared gold to other assets in the 20th century, gold as a growth asset relative to other things, you wouldn't really characterize it as an aggressive grower as about wealth preservation.
This century, it's a whole different picture.
Gold has outperformed almost every other asset.
And it's not so much the growth in gold that's important.
It's more so what changed at the turn of the century.
We're talking about the increase in the money supply.
And obviously, since COVID and 2008, we've stepped it up.
But it really started in the year 2000.
And essentially, there is this direct correlation, of course, between global supply of U.S. dollars and growth in gold.
And I think that's why it is becoming far more mainstream.
We're seeing hedge funds put larger percentages in gold than they've ever done before, individual investors, central banks around the world.
And it's for the same reasons, right?
These institutions or individuals all have exposure to U.S. dollars.
They're looking at the sort of the government printing it like it's going out of fashion, and they're starting to seek an alternative.
You know, and I mentioned just a minute ago that it's good.
The more people involved, you know, if there's 2% of the people that are protected, they may become victims, you know, when it's discovered what's going on and they're doing better and they're protected.
But I like the idea that the average person is getting involved.
And that's one thing that Birch Gold, a company that both you and I work with, and they have, Of tax laws and different things, I wish it were all so simple as you could buy gold easily and not worry about taxes and other things.
But Birchcold has emphasized the ability now by law, you can put gold into an IRA account.
And you've worked with that a lot.
You work with this company a while.
Wow.
And I think this is very good.
I have no idea how many people have done it because there are various companies offering an activity like this.
So I think the more the barrier.
I couldn't agree more with that.
And you're correct.
So U.S. tax code allows for individuals to place physical precious metals tax deferred within a retirement account.
So for anybody who has an IRA or a sort of eligible 401k, they have the option, again, per U.S. tax code, to roll any portion of those accounts over, no tax implications or penalties.
We can place physical precious metals within a retirement account.
For those that have, let's say, cash in a bank account losing to inflation, we can also sell physical precious metals for cash for physical delivery as well.
So we offer a full suite, both pre- and post-tax metals, always physical.
We think the physical nature of the investment is important.
And, you know, your viewers can get information very easily.
They just have to text Ron to 989898.
Again, Ron 989898.
And what that will get them access to is a free information kit on how and why to invest in precious metals.
I think start with the information and see where they go from there.
But yeah, we can facilitate everything from start to finish, Dr. Fall.
Keep a Tab on Price-Dollar Ratio 00:00:47
Philip, very good.
And it's been great to have you on the program once again.
And I imagine that we will have things to talk about continuously for a while because the climactic end is something that is unpredictable, exactly the timing of that.
But we cannot continue to do this.
But I think it's very important that people keep a tab on this.
And one thing I do think that the price-dollar ratio is very important.
I think the other thing that we need to keep an eye on, Philip, and you've mentioned it quite frequently, and that is what's happening with the international scene and the contest there is for the worldwide reserve currency.
So once again, Philip, thank you very much for being with us on the Liberty Report.
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