John Fredericks Interviews Phillip Patrick, May 21 2024
From Outside the Beltway with John Fredericks, May 21, 2024
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Transcript
John Fredericks: I'm in the heart of Texas. This is where the good ideas come together as one. Philip Patrick, of course, is precious metal specialist at Birch Gold.
And why do we love Birch Gold? Well, five reasons. Number one, totally Trump. Number two, totally MAGA. Number three, totally America first. Number four, part of the patriot economy. Number five, best rates, best service, best prices, full transparency.
I love Birch Gold. You want to buy gold? Only one company to go to. That's Birch Gold.
But let's talk a little economics with our good friend, Philip Patrick. Philip, great, great to have you with us now. Lately in Texas, where I am now, a lot of chatter here.
There's very mixed messages coming out of the Federal Reserve on both inflation and interest rates. Jerome Powell, he's got, you know, a Board of Governors. It's going to be his decision, but he takes their advice.
Texas chair basically saying economy is a disaster, so can't really cut interest rates. What say you?
Phillip Patrick: Yeah, look, I mean, earlier this month, the Fed came out. They acknowledged that inflation or progress on inflation had stalled.
It's been sticking around this 3.5% mark, and at the time had been trending up. And that raised questions, of course, as to whether rates might need to be pushed up further to wrestle down inflation.
On Friday, we saw the San Francisco Fed president, Mary Daly, say it's not clear at this point whether inflation is actually really receding. And she suggested there would be no urgency to adjust interest rates.
Vice Chair Philip Jefferson echoed that sentiment. He said, look, he and the Fed were very concerned with home prices, seeing them as a major factor in the cost of living.
So while it's true that the story changes depending on the audience, the overall message that we're getting is rate reductions at this point are not imminent. Inflation is still too high for that. And I would certainly agree.
JF: I mean, there's no way that they can lower rates right now. It just doesn't make any sense. It's only going to exacerbate inflation.
You know, one of the things I want to get to is a lot of the, when Biden keeps gaslighting, and his administration keeps gaslighting the country and saying, hey, there's no inflation. It was nine percent when he took over. It's actually down. It's all in your head. It's all great.
Isn't this backfiring? I mean, this is kind of aggravating people because, you know, their disposable income – we have one chart that says under Trump, disposable income was up about 12.5%. Now it's way down from there at, I think, 2.5%.
And that's without taking interest rate rises into account.
So it's kind of a disaster. So just on that, do you think that Biden and his surrogates completely keep going out there and telling everybody the economy is fine? Is that blowing up in their face? Because people are like, we have no empathy for what I'm going through.
PP: Yeah, the answer is absolutely yes.
And it was very telling. He did an interview on CNN not long ago, and he basically told the reporter, look, things are not as bad as you think they are. Right.
Which is a very bad message when people are paying 30% more for groceries. He's basically saying, don't believe your lying eyes. Right?
Even CNN called him out on that and said, look, since you've been in office, the economy has been essentially a disaster. They didn't use those words, and said to him that using rhetoric like that would be dangerous. And I think they're absolutely correct.
First of all, it's telling that it's coming from CNN.
Second of all, it's just telling in general, people are hurting out there. Credit card debt over 1.1 trillion dollars. People are struggling to make ends meet and to have the president come out there and say, hey, you're wrong. Things are actually OK. You're doing great.
Number one, it's not working.
Number two, it's just a slap in the face to the American people. So I hope he continues to do it come November, because it could be another nail in his coffin.
JF: Another boomerang, no doubt about it, you know, talking about inflation, the Biden administration, they recently circulated a memo that said, here's our new plan to fight inflation. What was in that?
PP: Yeah, basically, he's just blaming I think it's corporations now. So this has been a consistent theme with this administration.
Initially, it was transitory. Then it was supply chain snarls. Then it was Putinflation.
Then it was energy companies charging excessive profits, right, greedy energy corporations.
Yeah. According to the memo, now it is greedy corporations that are price gouging, which is keeping prices elevated despite inflation falling, according to the memo.
But to me, it just shows a basic misunderstanding of economics.
Inflation doesn't mean lower prices. It simply means prices are going up more slowly. So as long as the rate of inflation is above zero, prices will not come down.
But it's more of what we discussed, just scapegoating and blaming anybody outside of excessive money printing that this administration has been pushing consistently on our inflationary woes. It's nonsense.
JF: It's a disaster.
And, Philip, let me ask you this. Both the Biden administration and the Fed, how concerned are they about de-dollarization globally?
PP: I mean, they should be concerned. It's the biggest issue we're facing as a nation.
Yellen told, and I don't think it's shared by the administration, she told a House panel on the global de-dollarization trend. And I quote, she said, “we should expect over time a gradually increased share of other assets in reserve holdings of countries, a natural desire to diversify.”
Now, that's an admirable bit of political spin.
Diversification is smart. After all, we talk about it all the time. Honestly, though, it's just lipstick on a pick.
Chris Roller, Fed governor, spoke at a conference on the dollar's role in international trade. And he said, and I quote, the role of the U.S. economy in world finance is changing. And he's certainly right about that.
But if the administration are not concerned about de-dollarization, something is wrong. It is the biggest issue we have on the horizon. Let's not forget, we have amassed a colossal amount of debt.
We have interest rates already fairly high, given where they've been for the last 15 years. Debt is crippling us at the moment. Debt service payments will likely be the largest item in the federal budget this year.
The last thing we need is global demand for our debt waning. It is an unmitigated disaster. So it doesn't appear to be a concern, or at least they're not letting us know that it is, but it should be.
JF: Phil, let me ask you this. Goldman Sachs just issued a pretty fascinating forecast on what's going to happen to the price of gold. Can you elaborate on that?
PP: Yeah, it was an aggressive one. And we've got to remember, gold's up between 15% and 20% for the year, silver over 20% for the year already.
Goldman came out now predicting gold to hit anywhere between $2,700, which would be a 17% increase, roughly, from where we sit today. And as high as a $31.30 price, if there's an escalation in weaponization trends based on central bank gold buying alone, that would be a 29% increase from where we are today by the end of the year.
So at either price, whichever way you look at it, well, first of all, that is a significant increase from where we are today, and would put gold up close to 50% for the year, which is no surprise given what's happening geopolitically. Now, whichever one we hit, we're still off the inflation-adjusted high for gold back in the 1980s. If gold hit $850 an ounce back then, that would equate to $3,300 today.
Now, we've got to remember what drove gold through the 70s and into the 80s. It was a decade of stagflation, so essentially a very similar climate to the one we're in today. But there are two big differences today.
Number one, we've got less options. Yes, inflation was raging in the 70s and 80s, 8%, 9%. You could put your money in the bank and get 15% or 16%.
We don't have that today. The second and bigger issue, the dollar was king in the 1970s. We didn't have de-dollarization on the horizon.
Those two differences are big, and I think that suggests new records on the horizon for gold. So Goldman's predictions were encouraging, but I think there's a lot more to come from that.
JF: Well, listen, I'm not a financial analyst, so I can only tell you what I did.
I got all my retirement in gold. That's what I did. I'm not an expert, but I've been predicting gold is going to go over $3,000 an ounce now for about 36 months. Looks like I'm going to be spot on again, as I normally am on this stuff, just because I read a lot. So you get enough knowledge. You've been around the block.
I'm 66. You see these trends going on. You kind of know what's going to happen.
But look, for everybody out there, I think gold is going to continue to go up. That's what Phillips said. Look at diversifying some of your retirement portfolio.
You look at your 401k, your IRA, your pension plan. I've got all three. I've divested into gold.
Take a part of what you've got. It's not going to cost you anything. You just transfer the money over, and you take some out of whatever you have in equities, put it into precious metals.
You know you're going to have a diversification and a protection. But look, don't take my word for it. Get the information that you need to make the best decision for you and your family, because you don't want to get stuck homeless like I did when everything gets wiped out, and you don't know what the hell happened.
If I had gold back then, that wouldn't have happened to me. Here's what I suggest…
Birch Gold is going to send you a 24-page info kit. Look it over. Talk to your experts. Talk to your financial advisors. You get the information that you need to make a command decision, a good decision for your retirement for you and your family.
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