Larry Elder’s Gold Company is Birch Gold Group

Biden told the American people government spending was going to lower inflation. Pelosi said that increased spending is going to lower the national debt. It’s going to, it’s anti-inflationary.

These absurd claims have been put to the test and they failed. As far as I’m concerned, as long as these policies continue, inflation’s here to stay and it just heightens the risk of severe economic downturn. It really does.

Philip, the numbers just came out today and they are ugly. Inflation up year to year, 8.5%. Gasoline prices up year to year, almost 48%. Real wages down 0.8%. Give me your assessment on the economy.

I mean, it’s, it’s, it’s seemingly all bad news at the moment. You’re absolutely right. The Bureau of Labor Statistics came out today with inflation numbers.

They were horrendous, 8.5%, highest in 41 years, really since the early years of the Reagan administration and the tail end of the stagflation crisis. To put that into perspective with inflation at 8.5%, that’s the equivalent of people losing one and a half months of pay being consumed purely by rising prices. It’s a real problem and I think it’s going to get worse simply because there are a lot of forces today fueling inflation, right? We have domestic issues, specifically the Biden administration’s astounding fiscal policy and of course, global economic pressures as well, like the conflict we’re seeing in Russia and Ukraine.

I think the combination of these two has pushed the nation to the brink of what really could be a deep and severe recession. It’s tough times. Hold on, hold on, Philip.

The Biden administration says this is a worldwide phenomenon we’ve done nothing to jack up inflation. It’s going on in all parts of the world. Don’t blame us.

They’ve done everything they can to paint that picture, but I think they’ve forgotten that fuel prices were up significantly before a single boot stepped foot in Ukraine. This is simply a scapegoat, but it’s happening and it’s aggressive today. A lot of economic analysts are focusing on oil prices and I think rightly so.

It’s up 60% in the last year alone. Oil’s important because it’s the most inflationary commodity, right? It’s used in the production and transportation of almost every other commodity and it’s going to have a massive impact, I think, on overall prices, but there’s a bigger problem at hand in that Russia and Ukraine are two of the largest and most important food producers and exporters on the planet. These two countries provide 25% of the world’s grain as well as 17% of the world’s fertilizer.

The war is certainly contributing. The CEO of Agco, who are a very large agricultural corporation, said that 13% of global calories came out of production when the war started. I think the spikes in global food prices are going to continue, but let’s not forget a lot of this has been fueled by policy as well.

As you rightly hinted at, this isn’t purely on the back of the war. We had these issues prior. They’re going to compound the issue, I think, significantly.

We have a senator from Massachusetts here in America named Elizabeth Warren, and she has chastised the oil companies for their greed, chastised the meat and the produce producers for their greed. This is all about corporate greed. And, of course, one has to ask the question, why all of a sudden, Philip, did they just now become greedy? They weren’t greedy a little while ago.

Just today, the greed kicked in. Really? I think because it’s very convenient for these guys that that’s the reality, but they’ve been caught out. Look, the key thing, and it’s very obvious, is government spending.

Government spending is having a dramatic effect on inflation. In fact, the San Francisco Federal Reserve recently reported that the $4 trillion in pandemic relief has increased inflation by 3% alone. That’s just the tip of the iceberg.

The big problem for me is this administration’s solution to everything is pulling out the government checkbooks. We’ve talked about oil prices. What’s their solution? Is it to open up U.S. pipelines, to lower the price of oil, to make us less reliant on our strategic enemies? Absolutely not.

The solution is, every time gas goes over $4, let’s write a check. Let’s a stimulus check to people. Let’s cover that.

That’s because we’ve got to combat climate change. We have to force feed our economy from fossil fuel to unreliable renewables because of climate change. It’s exactly right.

They’re pushing this green agenda. They’re pushing that Green New Deal. Now is not the time.

I’ve always said, listen, this infrastructure plan, this Green New Deal, there’s a time to build bridges. There’s a time to do it, but we do not build bridges that our great-grandchildren are going to have to pay for. Now is not the time to do it.

Actually, the policies that they’re putting in place, they haven’t even thought through. Let’s look at this. Every time it goes over $4 a gallon, we’re going to cut a check.

How did the government say that they’re going to pay for that? They’re going to tax the oil companies. That’s the solution here. Tax the oil companies.

Show me in any economic textbook where raising producer costs leads to a lowering in prices. Here’s the big thing. We’re either dealing with complete incompetence or something more nefarious.

Remember back in November when these guys were trying to sell the $3 trillion budget, Biden told the American people government spending was going to lower inflation. Pelosi said that increased spending is going to lower the national debt. It’s anti-inflationary.

These absurd claims have been put to the test, and they failed. As far as I’m concerned, as long as these policies continue, inflation’s here to stay, and it just heightens the risk of severe economic downturn. It really does.

Philip, the Congressional Budget Office used to be the gold standard. They looked at Biden’s budget, and they said it’s going to add to the deficit. All of a sudden, the CBO is no longer the gold standard.

Again, it’s just convenient. Remember, they wanted to force it through, and it was a Democrat, Joe Manchin, that put his foot down and said, we’re not going to do it. You’ve got to score the bill.

Sure enough, CBO scores the bill. It’s inflationary, as you state. Now, of course, the CBO is no longer the gold standard.

It’s like whatever makes sense for their rhetoric, for their argument, they’ll go with it. The second it contradicts, then it’s nonsense. It’s too convenient.

These guys are pushing forward an agenda. In my mind, it’s to the detriment of the American people. It’s to the detriment of the country longer term, but they’re looking after short-term political gains.

Let’s find a scapegoat. Let’s tell them that inflation is unsolvable by the Republicans. We’re going to handle it.

It’s just compounding the issue, but it’s all political. Phil, I want to talk to you about quantitative easing. I think the first time I heard the term fiat currency, I was in the 7th or 8th grade.

My teacher, Mr. Lansdow, said that the currency is no longer backed by gold, backed by silver. Basically, government’s just printing stuff and saying, trust us to pay back our debts. Then there’s something called quantitative easing.

Please tell me about what that even means and how dangerous is it? Look, it’s very, very dangerous. Essentially, quantitative easing is when the government purchase government bonds. It’s a roundabout way to print money.

Now, on the surface, it’s a fantastic solution. You owe money, you print money, and you pay the debt. If it were that simple, debt wouldn’t exist as a concept between sovereign nations.

Everyone would be printing money, paying debt. There’s no consequence. Sadly, even you likely in the 7th grade understood that this doesn’t quite make sense.

Money doesn’t work that way. The more money you print, the more money you throw into the economy, what it does, it devalues currency and it fuels inflation. It is unavoidable.

There’s an economist, a Federal Reserve scholar, used to be at Carnegie Mellon called Alan Meltzer. He summarized this very well. He said, look, never in history has a country that financed big budget deficits with large amounts of central bank money, which is what we’re doing today, has avoided incredibly high levels of inflation.

He said, yet we’re printing money recklessly. He’s absolutely right. That’s why I say, is this war in Ukraine, is it adding to the inflationary fire? It certainly is.

But it’s not the reason. We were on this path long before the second the government decided to just start printing money with nothing to support it. It doesn’t work at all.

And it’s created a lot of the issues that we have today, as well as, by the way, issues in the stock market, right? A lot of this money was printed, it was pumped through the markets, and it was used as a tool to prop them up. It’s been successful in doing that, but we’ve created market issues on the back of it as well. The last time we had inflation like this, we had to wring it out with a severe, severe recession.

Is that what you’re foreseeing, Philip? Yeah, I am. And sadly, I’m not sure we even have the same tools to wring it out, right? So look, what the government did last time and what they’re trying to do today is to raise interest rates, right? To raise interest rates is really the only way you can crush inflation. Now, sadly, the raising of interest rates is going to have an effect on both the stock market and the housing market, both of which have been propped up by low interest rates and quantitative easing for over a decade.

So by raising interest rates, even a small amount, it’s going to have a significant impact on the market, which is why I think the stock market partly has been suffering this year. But here’s the big issue. We’ve put ourselves between a rock and a hard place, because I don’t think the government even can raise interest rates significantly enough to combat this level of inflation.

So look at a little bit of math. So last time inflation was this high, 1982, okay? The interest rates at the time on a government treasury, you were getting 14.5%. They had to be that aggressive with interest rates to crush today’s levels of inflation. But here’s why they can’t do that today.

In 1982, US national debt, $1.1 trillion. Today, $30 trillion, right? If they raise interest rates to 15%, the interest payments on our government debt would be larger than our tax revenue annually. So they can’t do it.

We’ve backed ourselves into a corner. I don’t think we have the tools to crush inflation. I don’t think we have the tools to keep the markets propped up.

This is eerily like the 70s, 10 years of stagflation, otherwise known as the lost decade. We’re setting ourselves up for the same thing again. I want to talk to you about gold in a second, Philip.

But first, given all the things you’re saying, we should be looking at cryptocurrency. What’s your opinion of cryptocurrency? Look, I think it’s interesting. I’m an investor.

I certainly have cryptocurrency. I’ve done very well on it. But it’s speculative, right? One of the key drivers for, by the way, when I say speculative, I think it’s going to be in existence long term, long before I leave this planet.

So I don’t think it’s a fad. The reason I think it’s speculative, it’s early, right? Look, I think it’s a natural progression that at some point, governments will adopt a form of digital currency. Look at the Biden administration today.

They want to track every $600 payment. They’re trying to beef up the IRS. For the government to adopt a digital currency, for me, it allows for more control.

So I see it on the horizon. But the concern for me as an investor is, you know, what we’re seeing now, a lot of the demand for cryptocurrency is the decentralization of the money supply. People are seeing what this administration are doing to the dollar, and they’re looking for an escape valve.

If we were to move to a digital currency here in the United States, I think these third-party currencies, the Bitcoins, the Ethereums, they become an issue for the government, right? Because this is a store of wealth outside of the dollar. So maybe they tax them to high heaven. Maybe they regulate their use out.

There are a lot of unanswered questions. So is it a market that I’m going to stay invested in? Yes, but it’s one that I’m very cautious of. I see it almost the opposite of gold and silver, right? Gold and silver aren’t going to grow 300% in 12 months, and we’ve seen that with some cryptocurrency.

But I don’t think they’ll show that same level of volatility either. So it’s different. Philip, here’s my last question, and I want you to take your time, respond to it as thoroughly as you want to.

I had the opportunity one time to interview Jim Rogers, a legendary investor. And I know that Birch Gold interviewed him, and I looked at the transcript of the interview. I want to read you part of what he said to get your response to it.

I’ve owned gold for many years. I’ve never sold any gold, and I can’t imagine I ever will sell gold in my life because it is somewhat of an insurance policy. I hope my daughters own gold someday.

If it goes down, I’ll buy more. I’m certainly not going to sell. Everybody should own some precious metals as an insurance policy.

So if they don’t have any right now, I would urge them to buy something. He also added this, Philip. First, do your homework.

Don’t buy gold because you heard me say it, or even because you hear you say it. But if people don’t own, they should start after they’ve done their homework, and then they probably will. If they do their homework, most people will realize, oh my gosh, I better have insurance, and gold and silver may get me through serious problems ahead, end of quote.

Your reaction, Philip? I mean, look, who am I to argue with Jim Rogers, right? And he’s absolutely spot on. Gold’s performance, gold’s history, it’s longer than almost any other asset class. And what we have seen over centuries is that gold always holds its value.

Something I tell people all the time because I think it’s interesting. You go back to biblical times, and an ounce of gold back then would buy somebody 400 loaves of bread. Today, at $5 a loaf, it does exactly that.

It buys somebody 400 loaves of bread. So this is an asset that over centuries has held buying power. But it becomes even more important in climates like this.

And the reason being, look at our issues. We have inflation. We have corrections, bubbles in the markets on the horizon.

And very importantly, I think our options today are more limited, right? Bonds, traditionally a safe haven, really struggling. U.S. treasuries are down 6.7% for the year so far. It’s the worst quarter for them in half a century.

The stock market, typically a very good inflation hedge, down 8% or 7%, sorry, for the year so far. So the traditional asset classes are struggling in this climate. And I think that makes safe haven commodities like gold and silver even more important.

They have intrinsic value. They increase as prices skyrocket. And we’re seeing it today, gold 8.7% up for the year so far, silver up over 10%.

They’re a very effective way to ensure that your money keeps pace with rising costs. So I think they’re a useful tool in diversification. One more thing I want to add, Jim Rogers is absolutely correct.

Look, there’s one thing, me coming on here and saying things, but doing your own research, getting knowledgeable, really understanding what you’re getting yourself into, that’s one of the most important things. So that’s why we always push information first, right? Learn, don’t be knee-jerk, don’t let fear drive you, but let fear drive you to educate yourself. And from there, I think the solutions will start to present themselves.

Any idea or any rule of thumb as to what percentage of your overall investment portfolio should be in gold or precious metals? Look, comfort level is going to drive that for people, right? And everyone’s a little bit different, but I think the key thing is diversification, right? What we never want to do in any climate is to put all of our eggs in any one basket. Now, it’s troublesome today, more so than it has been in the past because of the lack of options, but I still think it’s very, very important. So as long as people have that in mind, I think it’s key.

The other thing to think about is balance, right? It’s not for me to put out percentages, because again, I can’t speak for people’s comfort level, but by that same token, you want to make sure when you’re hedging, if one side of your portfolio goes down, the other can increase in that climate and to some degree mitigate those losses. In order for that to work, you’ve got to be thinking about the overall balance, but comfort’s key. Philip, Patrick, thank you so much for taking the time.

I really appreciate it. Thank you so much for having me. Like I said, it’s an honor and thank you for your time.

My pleasure.