Alan Greenspan, Peter Schiff and others have all advocated gold ownership – why hasn’t your financial adviser?
Several big names from the financial world have recently came out in favor of gold, including former Federal Reserve Chairman Alan Greenspan, who said that given its value as an international currency and that it’s unaffected by government decisions, gold is a good place to put your dollars these days. Yet, many financial advisers still don’t advocate gold. Why? Listen to our latest edition of the Market Report with Will Hart and Jake Kennedy.
Mark Alyn: This is the Market Report from the Birch Gold Group. Hi, I’m Mark Alyn. In studio with us Will Hart and Jake Kennedy from the Birch Gold Group. Gentlemen, welcome back to the Market Report.
Will Hart: Thank you Mark. Thanks for having me.
Mark Alyn: Let’s take a look at something. Some huge names have recently come out in favor of having gold. Peter Schiff is one. Let me read a quote, “I think people are worried about the yen, about the euro, so the dollar wins by default. It’s only because of the euphoric effects of our last round of QE hasn’t worn off yet, that gold is going to go to $5,000. I think when this decline is over, I think gold is going to take a rocket ship back up.” Alan Greenspan: “Gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.” And finally, Fidelity has said, “I believe that now is a good time to take advantage of negative short-term trading sentiment.” You know, our family financial adviser does not advocate gold. Have you heard this from customers and clients that you know, financial advisers are not suggesting any involvement in precious metals?
Will Hart: Well Mark, I’ll jump in on this one. I’m sure Jake’s going to have something to say also. I can tell you the clients that I speak too, they’re just not, their financial adviser or whoever the stock broker, they don’t suggest gold and they don’t bring it up. It’s just something that’s kind of left in the shadows. When gold had its run from 2000-2010, went up 400% their financial adviser never said, “Hey, you should buy gold.” And I think the main reason why, based on everything that I’m reading is that they don’t sell physical gold.
Mark Alyn: In other words they don’t make money?
Will Hart: Right. Well, you’re not going to have a Ford salesman tell you, “Hey, you should go buy a Dodge.” It’s just, they’re not going to do that. The Dodge could be the greatest car on the planet, but Ford’s not going to say, you know, why would they say that? It doesn’t benefit them. So, I think it’s again, it, what benefits them is what they’re going to obviously show their clients a product that they have. Like I don’t sell blenders so I’m not going to talk to clients about blenders. It’s just not something that I sell. I sell physical metals, platinum, palladium, gold and silver. I mean that’s just the product and right now you, Mark like you read, the experts are coming out saying, “Gold. This is the time to be buying.” And I think the experts are right.
Jake Kennedy: And it’s a mindset really from these guys. They’re trained to pull the company line whether it’s I don’t know, Fidelity, Charles Schwab, any of these guys right. They’re trained to, they have a certain set amount of products to sell that work for clients, that work for them and they don’t think outside the box. It’s all paper, paper assets for them. So whether it’s bonds, stocks, mutual funds and that’s what they do. And I think most people get stuck in the fact that it’s a, you know these guys are one-stop shops. And so they go there and think they’re fully diversified in bonds and stocks, when really that should only be part of your diversification strategy is having those assets. The other part should be, I don’t know I spoke to someone yesterday who had farmland, real estate, he owns parts of casinos, I thought that was pretty cool. But he had a bunch of other stuff and metals he was about to add.
Will Hart: Yeah, it would be.
Jake Kennedy: I know right, I was like, “How does that work?” But I think that’s true to diversification so you use stocks and bonds as part of your portfolio and you buy other things like precious metals to complement and add to it. But these guys, therefore when you put all your money into stocks and bonds, they don’t understand gold. They don’t follow the gold market. They don’t know how to sell you physical gold and when they do, they’re effectively sending money away from their four walls and therefore they’re sending their commissions and fees away too.
Will Hart: Yeah one of the things that I think I should share with you Mark is when clients will tell me, when they’ll bring it up to their financial adviser or their stock broker and they’ll say, “You know I’m thinking of buying physical gold.” And they get the response of, “What are you going to do with it? Are you going to go spend it one day? Are you going to go to 7-Eleven and buy something?” And that’s complete nonsense. I’ll explain it you Mark just in case listeners are out there questioning, “Well what do I do?”
Mark Alyn: Right.
Will Hart: “Because maybe I thought that’s what I’m supposed to do.” No. You’re going to take your gold, you’re going to take your silver and you going to sell it back. Like we’ll buy back our metals at the highest daily bid price. They can go sell it anywhere where you see a place that say “Buy Gold”. You’re going to sell it and you’re going to get the cash value and that cash which you’re going to spend. You’re not going to take a gold coin and buy something with it.
Mark Alyn: Part of what we’ve been talking about on this show is that gold is not there to make money, but it’s to preserve wealth.
Will Hart: Correct.
Jake Kennedy: So when you, let’s say you put money into gold today and in three years you got high inflation, dollars lost 20% of its value, you know this has all been going on. So you know, we could absolutely get there. And so you take that gold and what it’s done is it’s protected the value of the money that you put in by rising as inflation rises, because you know you’re going to need more dollars to buy an ounce of gold, and as the dollar has lost buying power and value then you know by default, gold goes up as well. So now your gold’s worth more, you take the money out of gold. You sell it and exchange it for dollars and as Will said, I think in another talk, then that money will more than likely buy you about the same in the future as what it does today. It’s what it has done throughout time. So it’s not really making you money, it’s preserving your buying power. But if you don’t have gold in your portfolio, and we have these things like high inflation, dollar devaluation, which most people are worried about, then your money sitting in the bank or your bonds at 2% or any other fixed assets are not going to keep up with inflation. And you may have let’s say, round number, $100,000 sitting in the bank, and most people think, “Well I’ve still got $100,000 in the bank.” But in three years’ time, or ten years’ time, what does that buy you? It buys you a lot less than it will do today.
Mark Alyn: And at the same time if it’s $100,000 in the bank today, and in three years the situations that you just mentioned, you know the inflation and devaluation, you may not have that $100,000. It could be less. I mean that’s what happened with the correction.
Jake Kennedy: Well that’s what most people don’t understand, is that money in the bank will still be $100,000 on paper but it’s about what it will buy you. So you take that out and buy stuff in three years, well milk could be, well I pay $6 a gallon, it could be $8 a gallon. You know okay, that’s just a couple of bucks but that’s like 20-30% growth, inflation.
Will Hart: And if you need a couple of gallons a week, it adds up over time.
Jake Kennedy: Well yeah. And then you buy bigger things of course as well, you know inflation is averaged you know the dollar in the last 10, 12 years has lost 38% of its value. So tickets to Disneyland are 75% more expensive than they were in 2000 or 2002. So now you take your money and you go and buy, you know your beer, your electricity, tickets to Disneyland, your movie tickets, I paid $13 the other day.
Mark Alyn: Isn’t that ridiculous.
Jake Kennedy: And so you buy stuff and suddenly your money buys you a lot less. Okay gas has doubled in the last five years. Has your money doubled in the last five years? No. So you’re spending the money, and you’re getting less in return.
Mark Alyn: Yeah.
Will Hart: And when you, the quote you, you mentioned Peter Schiff talking about gold going to $5,000 an ounce, again he’s not the only one that said that. I think that Ron Paul also said that a three to five. You know that’s pretty scary if you think about it Mark. Gold going to $5,000. We don’t want that to happen, because that means our dollars got worth a whole lot less. Less than half, I mean, of its value based upon you know where the value of gold is right now. So you know, you just have to prepare for the worst case scenario. You just have to plan.
Jake Kennedy: And the funny thing is, going back to your broker is that I’m getting a lot of brokers, they’re pulling like the company line. They’re pulling what the line of the government and the Federal Reserve and everybody is stating. And that is “Markets are up. The dollar is strong. The economy is turning around.” You know, Obama is on TV saying, “We’re turning this around. We’re doing good. Everything’s going well. And there’s some good stats to back it up. Inflation is low. It’s under 2%.” And that is also true. But it’s true for…
Mark Alyn: I’m sorry I don’t want to interrupt but they don’t include some, the major areas that…
Jake Kennedy: So the facts, they set the parameters for all these stats and so they can say it and put their hand on their heart. Everybody can say these things. So of course when people go and inquire about buying gold, these guys can say, “Well why would you buy gold? It’s coming down. The stock market’s booming. Everything is good. And why don’t you buy more stocks?” And so these people go, “Well yeah. You’re right.” And I guess that makes a lot of sense. But you’ve got to see beyond that. You know, when you see top guys like the Fidelity saying, “It’s a great time to buy gold.” Peter Schiff, Alan Greenspan, you know Federal Reserve Chairman for 20 years saying that, “Gold is a great place to put money right now because it’s going to rise measurably in the next five years because we’re going to have escalating inflation.” So that’s you know one of the top brains out there saying that. But if you go and start saying that to your advisers, they’ll think you’re crazy.
Mark Alyn: And even you know, Fidelity has said, you know, to have part of your portfolio… Joe Wickwire said to have 5 to 10% in your portfolio of a precious metal, gold. Because it’s going to be there to hedge against inflation.
Will Hart: Yeah, I mean I think you’re going to see more and more people admitting what is right because they realize you know when the dam starts to show its cracks and water starts to spout from the various, and they’re trying to put their finger…
Jake Kennedy: Which it is doing.
Will Hart: Yeah. Exactly. And so now I think it’s too the point where they realize there’s no stopping this and this is what is going to happen and I at least want to be on the record saying, “Yeah, I, hey, I said gold and look there it happened.” And he can look like a good guy.
Jake Kennedy: And at the same time you don’t want to call your broker and say, “Three years or four years, five years and say, “I told we should have bought gold, now we have nothing!”
Mark Alyn: Right. And that’s what happened in 2008 isn’t it?
Will Hart: Correct. In 2008 obviously people had they reacted the right way, they would have weathered through this, through that crash much better than again, that 98% swing. I think I mentioned in a previous show…
Mark Alyn: Right.
Will Hart: …where you know that 40% in the market and the 58% gain in gold.
Mark Alyn: I know that a lot of people were wiped out of their savings, their IRA’s, their retirement people are looking for work in their 70’s, not because they want to work but because they have to work.
Will Hart: Yeah, because their dollar’s not buying what it used to buy. So people, the government does not say, “Hey folks, look. We’re sorry we devalued your dollar by 40% over the last 10 years, but we’re going to make it up for you. We’re going to make it up to you somehow. And here’s how we’re going to do it.” No they’re not doing that. It’s just, you know people’s income did not increase to justify that loss.
Mark Alyn: And it’s still not increasing today.
Will Hart: No. And you mentioned that Peter Schiff article you started off the segment with, you know he’s talking about how we’re still, we’re still benefiting from the effects of this last Quantitative Easing. In other words there’s that much money poured into the system and now they are supposedly they are not doing it anymore. Well, it’s like when you’re in a car and you go 100 miles an hour and then you, you just put it in neutral. You’ll glide for quite a ways before eventually you stop. So we’re getting, we still have the momentum of that Quantitative Easing, but like Peter Schiff says and other experts probably will agree with him, that eventually that momentum will stop and then you’re going to see the true effects of the dollar and gold.
Mark Alyn: It occurred to me that gold is not the only precious metal to buy. Silver’s another, and there are others.
Jake Kennedy: Indeed there’s, I mean, very popular right now is silver. Silver is selling faster than I think than it’s ever sold before. A very interesting fact from the U.S. Mint: About a week ago, last Thursday, the Mint sold 2,000,000 ounces of silver in two hours. And that’s 90% of the global production of silver for a day.
Mark Alyn: Wow.
Jake Kennedy: So they sold and they’re still selling. They’ve run out and they’re trying to catch up by buying more raw silver to make more products, more coins. And we’re seeing that here too. We’ve luckily stocked up. We do have Silver Eagles available. But the point is we’ve got delays in other products, silver bars. We’ve got 1 ounce, 10 ounce. We’ve got six weeks waits on those. I mean they just can’t fulfil the orders quick enough. So and the reason is, because silver historically to gold is at an all-time spread. The ratio is something like 72, 74 to 1. It used to be 15 to 1.
Mark Alyn: Oh, wow.
Jake Kennedy: And that may not mean a lot to a bunch of people but what it really is saying is that silver is undervalued. And we know this. I mean it costs $6 more than the spot price of silver to make an ounce of silver. So it’s very undervalued right now. And people are really taking advantage of this opportunity in the price of silver. And if, you know, you hold it and indeed we see a slingshot effect here, there’s experts who predict silver going back up to $50 an ounce, $100, $200, $400. I read an article two weeks ago, $5,000 an ounce silver. I mean.
Mark Alyn: Oh wow.
Jake Kennedy: That’s, I don’t know, how possible that is, but Ron Paul in another interview talked about gold going to infinity. And again, you’d scratch your head. You just can’t understand those kind of numbers because in our lives right now, they make no sense. But in these countries where you’ve seen hyperinflation and currencies get destroyed, then you really do, you know, wheelbarrows full of cash worth nothing. That’s what he’s talking about is the dollar or you know in this case, the dollar will lose that much value that, you know, you might need you know, $10,000 to buy a loaf of bread or an ounce of gold of whatever. So it’s pretty interesting. But silver is a real good opportunity price right now. So that’s why we’re selling a lot of it.
Mark Alyn: So silver is a good buy right now?
Jake Kennedy: Yeah. And a lot of people…
Will Hart: Silver is a phenomenal buy right now.
Jake Kennedy: A lot of people like the idea that silver isn’t just a precious metal. It isn’t just a currency. It’s also got over 10,000 industrial uses. And the thing about silver is that you use it and you don’t recycle it. You use it and it’s gone. So we’re using huge amounts of silver right now and it’s getting put into bombs to get blown up, cell phones that never get recycled, electronics.
Will Hart: A lot of it is unrecoverable.
Jake Kennedy: So that’s why you know, people eat silver, colloidal silver. So it disappears and that’s why you know, we had someone in here talking the other day and they said that the Geological Institute of America stated that within 20 years silver could be the first extinct metal. So just on that alone, that’s a great buying you know idea there, is that you buy something that in 20 years may not be or have very limited availability. I mean that’s a price squeeze right there.
Mark Alyn: And of course that would drive the price up again.
Jake Kennedy: Sure.
Will Hart: Correct. Right.
Mark Alyn: Gentlemen, thank you very much. This has been The Market Record from the Birch Gold Group. If you would like to talk to a Gold Specialist or a Precious Metal Specialist, give us a call at (800) 355-2116. We also love to have your input, your questions through e-mail. And you can e-mail us at [email protected] Visit our website. It is just stacked, chalk-full of great information about all precious metals and why you should have them in your portfolio. Visit us at www.birchgold.com. Well Jake, thank you very much. We’ll see you soon on the next edition.
Jake Kennedy: Thanks Mark.
Mark Alyn: This is The Market Report from the Birch Gold Group. I’m Mark Alyn. We’ll see you soon.