What Is Real Money? Why Dollars Aren’t Savings & Gold Returns | @Goldsilver's Alan Hibbard
Summary
Hard Money vs Currency: The guest distinguishes saving (gold, silver, Bitcoin) from investing/speculation, emphasizing preservation of energy/value over time.
Precious Metals: Gold and silver are framed as primary stores of value resistant to entropy, with caveats on silver’s industrial use and periodic supply shocks.
Bitcoin: Positioned as digital gold prioritizing security and decentralization over scalability, making it unsuitable as a currency but viable for long-term saving if understood.
Monetary Trilemma: Discussion of scalability, decentralization, and security trade-offs explains why money and currency must be layered in a system.
Market Outlook: Signals of dollar weakness, sanctions, and central bank dynamics suggest movement toward a new monetary regime potentially referencing gold.
Gold Standard: A potential gold-backed framework is explored, with recognition of political, debt, and social constraints that complicate implementation.
Opportunities & Risks: Holding money (gold/silver/Bitcoin) for long-term savings and using currencies for transactions; risks include Bitcoin volatility and silver’s supply sensitivity.
Investment Perspective: Focus on emotional tolerance, balance, and minimizing “energy liabilities,” building portfolios that require infrequent intervention.
Transcript
If you're holding on to dollars, that is not saving. Like, if you just have a bunch of these in your pocket or your bank account, you think of that as saving. You speak of it as saving. That is not saving. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Greetings and welcome to our Wealthy Show. My name is Trey Reich and we're here today with Alan Hibbert who I would say along with Larry Leard is probably one of the most influential voices in the crusade for the benefits of hard money today. So Allan currently hangs his hat at least primarily as a strategist and commentator at gold and silver.com uh which I think a lot of wealthy viewers are pretty familiar with. Uh but most recently Allan has released, launched, produced a six-part series on golds.com uh entitled the hidden secrets of value uh which is essentially Allen's personal journey of understanding the difference uh between money and value. uh if it's okay with our viewers, I thought we would delve into uh a little bit of each of the six episodes uh that Allan I'm sure will be happy to give us brief synopsis thereof. So uh the first chapter in this journey is savings versus investing and this particular segment picks up on the difference between price and value. uh and you introduced uh the term or concept of entropy in a system and how entropy is reduced uh by making energy more ordered and less random. Um so can you give us a synopsis of of chapter one? >> Yeah. Well, thank you Trey for having me. Good to be with you today. Um chapter one, saving versus investing. A lot of people might be tempted to skip over this. Yeah. Yeah. I understand. I save a bunch of dollars. Fine. They lose value. So, I better invest that way I can acrue value. And I would actually push back on that right off the bat. And I think that if you're holding on to dollars, that is not saving. Like if you just have a bunch of these in your pocket or your bank account, you think of that as saving. You speak of it as saving. That is not saving. >> So, what I would say to absolutely start the conversation is saving means preserving your value, your hard-earned value. So whatever you use your time and energy to do to create things let's say you build websites for a living or you're an accountant or you're a truck driver whatever you do to acrue value maybe in the form of currency or money if you want to protect it your intention is to save and the way you do that is not by holding dollars or fiat currencies you got to hold real money and so the the the classic example of that is gold and silver I have an ounce of each right here they're always next to me um gold and silver that's real saving I would also lump Bitcoin into that category, but we can we can talk about that later. Um, but that's saving. And a lot of people talk about, oh, if you if you hold gold or silver, you're a gold investor or you're a silver investor. We use the word investor. >> And again, I would just push back a little bit and encourage people to reframe it and say if you're just holding the physical asset, you're saving and you're protecting your value. And uh investing is when you actually risk your value to try to acrue more which is a very different strategy. There's a different intention. And last thing I'll say on this point is the thing that pains me the most when I look at society in general is how pretty much everybody who is an investor who has a 401k or you know brokerage account or whatever almost everybody is a reluctant investor. They're really just trying to keep what they have and they're trying to beat inflation so that they can actually retire off the fruits of their labor and for thousands of years everybody could like you know anything you acrewed throughout your lifetime was enough to sustain you just by saving and you didn't have to invest you didn't have to find businesses to you know lend money to or support financially. Um, so, so episode one is the difference between saving and investing. And if you can reframe that and realize that holding gold and silver is saving, that's a starting point. And then taking risks to do anything else, that's investing. And that's that should be optional for everybody above and beyond. Um, that's a really good place to start before going any further in the series. And we're going to get uh to investing later again. But I think another sort of introductory concept for most people and uh I don't mean to be dimminionative but I think most people most investors would fail to differentiate between money and currency. I think a lot of us I think the vast majority of investors would suggest money and currency are essentially equivalent. Uh therefore, as you point out, millions of investors store their hard-earned wealth and energy and assets that are actually designed to lose value over time. I mean, it's a pretty remarkable concept and I think the short description of this concept is fiat currency, but can you give us a little input here? >> Yeah, exactly. So, episode two, as you point out, is the difference between money and currency. And there's really two separate use cases that you can think about here. Uh, one is storing your value. The other is transporting or moving your value. And it's kind of like the difference between a house and a car, right? A house is a store of your valuables, including yourself, like while you're in it, while you're sleeping. It's protecting you from the elements so you don't get rained on in the middle of the night. However, a car transports your valuables, right? Or a subway or a metro, anything. Um, and these are two completely different use cases. And so, in the financial realm, gold is money. It's designed to store your value. It just sits there. It's very good at just sitting there. That's what it does. And so, people criticize it. They say, "Gold has no yield. Gold has no cash flow, no dividends." It's not supposed to. It's supposed to store your wealth. It's not supposed to risk it to try to get more. On the other hand, currency is optimized to move value around. It's very good for transacting. And in order to be really good at transacting, it has to reduce friction. All the different points of friction um that you might encounter when transacting with somebody. But in order to be really good at movement, it has to give up the ability to store value over time. It's just it's just a design trade-off. It's a dilemma. And so money and currency are two different solutions to two different problems. They're both good and useful and valuable, but the problem that people run into, like you said, is that they think about currency as if it were money and they just hold on to it for a long period of time and they're losing value the longer that they hold it. So, one of the things that's really important for people like as a as a basic framework is to think, okay, if I have if I have expenses or anything I need to spend value on, if I have to spend currency on it in the near future, I should probably have currency. But if I want to save my value for the long term, I should probably assign that to money. I should put that into money and hold that for a long time. So, that's the difference between money and currency. And I'm going to sort of complicate things by flipping this around in my 25 years and talking about gold as money. Uh I you I and I'm sure you and everyone frequently encounters well there's no utility for gold. You can't eat it. You can't put it in your gas tank and you can't put it in your roof. And I'm going to outdo you a little with my money in my pocket. But I always >> currency currency in your pocket. And I always tell people, when was the last time you ate a $50 bill or put it in your gas tank or tried to put it in your roof? That's not what money is for. So in fact, if money has if the form of value that you're talking about has utility, it decreases in my opinion its value as a store of value over time. So it's kind of an interesting uh conflict there. So, chapter three and um I'm going to see if you can remember all 12, but chapter chapter three we talk about I used to mention like four portable, durable, divisible, but you've expanded it a bit. I don't know if you want to talk about all 12, but um I think there are lots of different categories for what people consider as money. And the question is as you look at each one of these categories, does it allow you to store effort and energy? Um, you know, money is what you want when there's nothing else you want and it represents pure optionality and stored energy. Uh, it's a receipt, as you point out, of valuable work done. But if we're going to cut it down to how we would look at say the dollar or bitcoin or gold or seashells or whatever you want to throw in the equation, what are your uh characteristics of what defines a good money? >> Yeah, good question. And so I came up with 12 properties of money. Um, but I think rather than going I can go through some of the 12, but I think maybe a better framework for our audience is to >> when you're lying in bed at night, what are the four that come to mind first? >> It depends a little bit. So here here's where they come from that's maybe more interesting. Okay, >> where where it comes from is, okay, let's suppose I go out and I work all day or all week or however long it takes and I amass, you know, one gold coin worth of value. Okay, five over $5,000 now. Um, so the question is, I just exerted a whole bunch of labor, whole bunch of energy. What I don't want to happen is I wait some amount of time, like a year, and then I go to give this to somebody and everyone just says, "No, I don't want it." And it's like, well, shoot, th this, if that happens, this would have been a really bad choice, right? I should have I should have held something else. That could happen with dollars. Maybe I could sit on a stack of $5,000. And I go to give them to someone and they say, "Nope, won't take them." So So what is the problem? The problem is I have all this energy now or let's say this week. I'm going to work really hard, create something valuable for somebody and they're going to compensate me with something, an item, a unit, an ounce of gold, whatever it is. So my challenge is what do I put that energy into so that I can go an arbitrary amount of time, an arbitrary distance across the world and then unleash it by giving it to somebody and entice that person to exert just as much energy as I spent when I acquired it in the first place. >> That's the problem. And if you think through all these different scenarios of how that might go wrong, you can come up with solutions that are really the 12 properties of money. >> So, just as one example, portable. Okay, let's pretend I I work really hard and I get like a car, like a $5,000 car, a beater. Um, but it doesn't drive. There's no wheels on it. It just it's on cinder blocks. It just sits there. Well, that's not great because if I go across the country, I'm how am I going to get that car with me? I'd have to tow it or somehow get it into working condition. So, that thing in its current state is not portable. So, in order for me to move it to wherever I want to go, I would have to exert so much additional energy >> in order to keep my receipt of energy. >> That's not a good deal. >> So, that's why we want our money to be portable. Okay? We also want it to be durable. So if I use something like a car for example and it just starts rusting, right? It oxidizes, it just rusts. Well, it's not durable. It's not going to retain value over time. So portable, durable, divisible, fungeible, all these different things. They're all different solutions to potential problems you would have. And every single problem is your energy would leak in your effort to maintain your energy. So, you don't want your energy to leak. So, you can think through all the possible ways. How might my energy leak? And those are all the properties you want your money to have. And I came up with 12 of them. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. >> So, you mentioned the first four, but I'm just going to be a little bit of a book rat and give everyone else the other eight. So he mentioned portable and I want everyone to think about this. Think about this. These aren't just adjectives. They're really important concepts. So portable makes sense. Durable obviously divisible that what's allows you to buy a cup of coffee and get change. Fungeible meaning you can take that gold coin to anywhere in the world in India, Pakistan, Sri Lanka and you can e easily establish its value. quantifiable, recognizable, desirable, which is a very good point, liquid, secure, verifiable, which I guess with silver coins is a little more difficult than gold coins. It's pretty easy to guarantee that they're gold, arduous, and here's the new concept, decentralized. So, we're going to get back to that in a minute, but uh chapter I think we're up to four uh is physics of money. Excuse me, three. Um and this is an interesting concept. Money as a physical force as opposed to just a financial tool. Let me say that again. Money as a physical force as opposed to just a financial tool. and entropy here being the unseen enemy of wealth. So I if you could give us a little bit on the concept of entropy and how you apply that to your view of money. >> Yeah, definitely. So entropy is one of those weird words and aside from arduous I think it might be the only the only one that really needs explanation. Um so entropy is a measure of how spread out energy is in a system. >> Mh. And so it's kind of like a golf score in the sense that high entropy or a high golf score is bad. And if you're good at golf or if you have a neatly ordered system, you have a low score, you have low entropy. And and we we want our systems, right? Whether they're monetary systems or, you know, your calendar or your kitchen or your bedroom, we want our systems to be organized and neat in a low entropy state because they're just more useful to us. And when energy is spread out closer to random, things are less useful. So may maybe one other way I'll explain it is with a deck of cards. If you open a brand new deck of cards, 52 cards, you can scroll through them and they're all in order. They're all sequential. That's a really low entropy state. That's very useful. You could do all kinds of things with that. Now, if you shuffle them up and they're in a random order, you know, you can still do I mean, you could like deal out a hand of cards, but there's less >> Yeah. Exactly. Exactly. And uh so so the shuffle deck has a higher entropy. It's more random. And one way you know that it's more random is you could take any two out of the 52 cards and switch their places and then show the deck to somebody and from their perspective it would still look the same. It would still look random. But if you started with that brand new deck and you switched two of the cards it it would immediately jump out. You'd say, "Why are those two cards out of order?" You would immediately know that there was there there was something disorganized about it. So those low entropy states are super valuable and they're non-random like someone definitely deliberately created that sequencing and high entropy states are random. They're less useful. Um you know no sign of intelligent life if you will. Um and so what does that mean for money? Okay. Well, I just mentioned a minute ago that the problem that we have with money is that we have energy and we use it now and we want to save it for later and we want to store it in some kind of vessel across time and space so that we can release that same amount of energy in the future. However, the second law of thermodynamics says the entropy of the universe is always increasing. And what that means is energy is always tending to spread out everywhere. everywhere in your body, in your bedroom, in your company, right? Everyone's just constantly getting slightly more disorganized over time. Everyone everywhere. And it's your job as a conscious being to provide order, provide structure. You know, you make your bed every morning, you do the dishes, you whatever it is, and you you put energy into maintaining a low entropy state. And so money le or or any any unit that you might try to use as money, let's put it that way, any any asset whether you know whatever it is, it is subjected to the forces of entropy like anything else. And that energy is going to tend to leak over time. And so your job in my mind is to select an asset that is as resistant to entropy as it possibly can be. >> And that's money. That's a store of value. And then the last thing I'll say in contrast going back to currency something like the dollar the dollar is solving a different problem. Instead of trying to minimize entropy like money currency is trying to minimize friction. It's a completely different problem completely different use case. And so any good currency minimizes friction so you can move it around. If you know any anything about physics friction only arises when you try to move. When anything tries to move it encounters friction. And so that's already a clue that a currency is designed to move. And so if you can design an asset that reduces friction, you have a fantastic currency. But I'm willing to bet that it's not going to be a store of value because it's not going to resist entropy. So does that make sense? >> 100%. >> Okay. >> So uh bringing this to a bit of a conclusion in the next uh section, which is designing perfect money. I wrote this down because it really hit me as a great way to uh put this out as a contrast. But uh you wrote a good money will forego scalability to achieve maximum security and decentralization. A good currency will forego decentralization to achieve maximum scalability and security. Can you talk about that? Yeah. Uh it might be easier with some visuals. Uh but yeah, I'll talk about it. Maybe you can add them in post. Um but uh there's there's a three-way trillemma. So I think I think people are familiar with a dilemma like you can't have two things. You want two things, but you can't have both because they're kind of mutually exclusive. Like you want to stay home and relax, but you also want to go to the party. >> You you got to pick one or the other. So when it comes to designing these assets, there's a three-way trillemma where we want three different things, but we can only pick two of them. And the three things we want, we want scalability. So we want to be able to have a lot of transactions very quickly uh individually. Like I want to be able to make a lot of transactions quickly, but also all of us, we all want to make a lot of transactions quickly. So like Visa handles something like a 100,000 transactions per second maybe or or it has the capacity to a lot of transactions per second. That's a lot of scalability. And we also want the network to be able to grow so we can accommodate 8 billion people transacting at the same time and so forth. So we want a lot of scalability. That would be lovely. We also want a lot of decentralization. And decentralization means that no no entity or no no subset of the network has special permissions that the other users don't have. Mhm. >> So, um, any type of government is centralized because obviously the government can do things that the citizens cannot. A company is centralized. The CEO can do things that the the other people cannot and so forth. But something like gold is decentralized. It's all over the earth. If you want to go out and try to find it in your backyard, you know, go for it. Um, so no, no one says how many protons and electrons are in an ounce of gold. No one says whether it conducts electricity or not. No one has control over that. It's completely decentralized. So, anyone who interacts with gold has the same permissions as everyone else. So, gold is decentralized. And we would love for our monetary systems to be completely decentralized because then we could trust them more. Um, you know, if you've ever had a company or a country, betray your trust. You know what I'm talking about. So, and the third thing we want, so scalability, decentralization, we also want security. That one kind of doesn't really need an explanation. Basically, you don't want anyone creating counterfeits. um or or double spending their money. Um you know, photocopying a dollar and then then spending a dollar two different times. You don't want people doing that. You want them the unit of money to be very secure. So, we would like to have all three, but unfortunately, you can only pick two at a time. And you can pick two and get really good at them, or you can be pretty lousy and try to do all three. And just just to give an example of a lousy version, most of the crypto of the 20,000 however many thousands cryptocurrencies are out there, most of them are a lousy version of all three. They're trying to do all three and they're just absolutely terrible. There's no use case for for crap like that. >> Um, some have realized, okay, we have to sacrifice one thing. They all sacrifice decentralization. That way they can continue to be a company and, you know, control their product. No big deal. And then they do the other two things really well. They say, "We're going to be as secure as we possibly can and we're going to make our network super scalable." So if you ever go on a cryptocurrency's website, it's without a doubt they they almost all say we're 1,000 times faster than Bitcoin. You know, like they're comparing apples to oranges. It's like someone who has a Honda Civic and saying we are way faster than that guy's house. >> It's like, well, houses aren't supposed to move. So Bitcoin isn't supposed to move. Gold isn't supposed to move. Um, anyways, so yeah, do you want to jump in? >> Well, since you brought this up, and I was going to get to Bitcoin a little later, but this is a great uh pause or segue. Does Bitcoin is part of the attraction of Bitcoin, which is obviously a very very strong attraction that it comes closest to solving the trillemma. >> Oo, I thought you were going to phrase the question differently. Um, a lot of people think that Bitcoin solves the trillemma. I do not I think that Bitcoin is the simplest way to understand it if you understand what gold is I would say that Bitcoin is digital gold >> and Bitcoin and gold as monies you know using my vocabulary here >> they choose to sacrifice scalability and they go after the other two they go after um security and decentralization so nobody using Bitcoin has any permission that anyone else using Bitcoin doesn't have just like gold so it's totally decentralized Um, and they're both very secure. Gold, very hard to counterfeit gold. Very hard to counterfeit Bitcoin. >> They're both very, very, very secure. Um, and so they sacrifice scalability. So if you think about the the Bitcoin network, I I think the transactions per second are like seven seven transactions per second, like total for the whole network. >> So if seven people are trying to transact at the same time, buy a cup of coffee or groceries, whatever it is, >> there's going to be a huge bottleneck in the system. And and that's why nobody uses Bitcoin as a currency. It's it's effectively a failed currency and that's >> that's really no secret. Um so all these different curren excuse me all these different companies tried accepting Bitcoin as a currency a few years ago. Um you know the Microsoft and Dell and Overstock and Wikipedia or >> Tesla. Exactly. And you know a couple months goes by and then they say all right we changed our minds. We're not doing it because no one wants to pay with it. The fees are too high. Blah blah blah. It's not a currency and I don't think it will be. But since we're talking about episode 5 here of the series, designing the perfect money, what does the perfect money look like? Well, there's sort of a there it's it's almost like a gotcha moment. Like there's a difference between money, designing the perfect money. Like gold is the perfect physical money. I think Bitcoin so far is the perfect digital money. So we we kind of have the perfect money, but that's not where it ends really. What we want to design is the perfect monetary system because if everyone's just using gold and Bitcoin, nobody can buy a cup of coffee. Nobody can buy groceries. Like the economy will stall. It's just not viable. So part of designing the perfect money is realizing that we need currencies to go along with the money. And that's when we actually scale it. So the question becomes, you know, you know, the dollar is not really going away. It just it may get redefined or become worth less over time, okay? But it's not going to disappear. And so the some of these interesting questions become, you know, do we back the dollar with gold? Okay, may maybe physically we do. Maybe in a digital sense, the digital dollar that already exists, the digital dollars that are in our bank accounts. Okay, that digital dollar. Do we back those with gold? Um maybe do we back those with Bitcoin? I don't know. Um I don't think we should, but these are these are questions that that can be discussed. But I think that in order for our society to function well, we do have to have a layer one money, a base money, whether it's gold or bitcoin, separate discussion. Um, but then we scale that with currencies. And so you you really want to have one money at the bottom, like whatever you think is the best at resisting entropy, okay? And then you can scale that with hundreds of currencies, thousands of currencies. They can be government currencies, corporate currencies, you can have airline miles, hotel points, what whatever it is. um you know so there'll be a whole bunch of currency. So so that to me is the dynamics between money and currency and how we might you know design it a perfect version of it. >> Very interesting. So um let's go to chapter six and then we're going to come back to that with some sort of realworld observations about what's going on right now. But your conclusion uh which I mentioned to you before we started actually put me in a good mood uh before we got started which is you know how to get rich and you point out that uh the definition of getting rich is all too often defined as how many shares of Nvidia you know do you own and that type of thing and when did you buy it and flashy numbers and stock tips and winning trades. So uh your point is that uh and I think it's obviously a very important point is winning getting rich uh could be more properly defined as gaining control of your time and your energy uh and your life. And true quote unquote richness uh is built through saving in real money and investing in relationships and as you point out freedom and joy. So, uh, can you give us a few ideas here on how people might gain more, uh, satisfaction and reccalibrating a bit? >> Yeah, definitely. So, yeah, the episode is called How to Get Rich, and I put rich in quotes because it's it's not that financial rich that you're talking about. It's all those other things. And it's tempting or it's all too easy to forget that really what's enjoyable, like what's a sign of a of a happy life or a successful life, it's not the amount of money. It's not the financial piece of life. Like that should support all the other stuff. Like money is important so that you can eat, so that you can go on vacation, so that you can see the kids or the grandkids or whatever it is. Take them to Disney World, you know? you know, money is important, but it's not it's not the thing that we should all be chasing. And I I just see a lot of people um you know, sherking um opportunities to spend time with their family and they're on their phone, you know, refreshing their crypto account or they're refreshing, you know, whatever their brokerage account. It's like, man, like put that thing away. Like somehow you got to construct your financial portfolio so it doesn't take up your attention every day. So you can go a week or two without even thinking about it and you're going to be okay. Like like I just I just see a lot of people setting themselves up to have an energy liability. So it's one thing to have like a liability like debt like mortgage, student loans, credit card payments, all those things. And having all those liabilities on your financial balance sheet is probably not a good idea unless you have, you know, a prudent use of debt. you know, let's say a rental property or something like that. But you can also think about your life using energy like your energy balance sheet, your assets and your liabilities. And people are full of energy liabilities. So that they have to spend energy thinking about something. They have to spend energy, you know, paying attention to something, making some kind of uh trade, checking into an account, making a decision. If something's up or down today, do I buy more? you know. Um, so if you think about it that way and set yourself up so you don't have so many energy liabilities, maybe you can put your portfolio on a little bit of autopilot, maybe trade once or twice a year and just buy things and hold for several years. You probably can be a lot happier in life. You can invest in your relationships. So you could call people on the phone and, you know, spend time with them in person. And, you know, I I think life just gets better when you build it that way. So, I have a few sort of uh ending questions about the real world, and I think you just segueed into one of them. Since you are literally one of the world's foremost experts on like what money really is and what it means to save, how do you approach the balance between savings and speculation? Now, I know you're going to say that's a very personal decision and everyone I mean we're going to do the disclaimer. It depends on your goals and all that, but once we get past that disclaimer, how should the average uh person look at that balance? >> Yeah, it's a good question and those are good disclaimers. Uh I think one of the big epiphanies that I had is that the the math of let's say saving and investing, the math of it is not that hard. It's the emotions that are the hard part. >> So I would I would encourage people to focus on emotional awareness. >> And so when you're trying to decide how to allocate your portfolio, how much do I save, how much do I speculate, I think it's an answer of how much emotional volatility you can tolerate. M >> so if it's going to really hurt you if you take a position in something and then the dollar value of it goes down the next day 1% 10% whatever the number is if that's really going to bother you that's really good information for you to have and you have to build a strategy accordingly >> um >> what that does not how you can build tolerance is one thing I should say you can build tolerance so if if it's the percentage that bothers you I can't you know if it goes down more than 1% I'm going to be really upset okay fine Think about it in terms of dollars. If you like put a $100 into something and if it goes down to 99, okay, you lost $1. Is that is that really upsetting to you? Probably not. Um, so you can build up that emotional tolerance over time. Another thing that's really important to understand is a lot of people delay any kind of investing or risk-taking out of ambiguous fear. They just have this general fear of something going wrong. And if you sit them down and say, "Well, what specifically are you worried about?" They have a hard time articulating it. Just like, "Ah, catastrophe. Ah, I could be homeless." Okay, well, hang on. Like, let's slow it down. You know, be be more clear about what your fear is. >> And you can actually go through an exercise called fear setting. It's a lot like goal setting where you write down your goals and then how you're going to achieve them, but you write down your fears and then how you're going to make sure that they don't happen. So, if you're afraid of, you know, losing your life savings in the stock market, one way you can make sure that doesn't happen is don't put your life savings in the stock market. So, that's pretty simple. Like, you limit your risk. Only put 10% in or some number. So, it sounds kind of obvious, but I just see so many people who never take action and they miss out on all these great moves and, you know, they're jealous of all their friends, but they just they're just crippled by fear. And it's like once you can articulate what your fear is and you realize it's probably not as big of a deal as you think and that there's easy steps you can take um to mitigate them um you'll be a lot better off. So so just more precisely to your point, how do you figure out the difference between saving versus speculating and and what the balance is? It's it's guess and check. There's no perfect answer. It is it is dependent on the person and you'll tweak it as you go and try to enjoy the process. Realize you're going to make mistakes. Everyone makes mistakes. You're going to buy something and then regret it and say, "Ah, I should have waited, or I should have bought three years earlier, or I should have bought this other thing instead." It's going to happen. Don't be afraid of making mistakes. Just mitigate the downside of each mistake and frame it as tuition in the school of life. It's just a price to pay to learn. And any mistake you make with $100, you can get it right with $1,000. And if you make a mistake with $1,000, you'll get it right with $10,000. And and so on. you can just keep getting better. Don't be afraid of learning. >> So, you're reminding me one of our family friends is famous for the phrase everything in moderation. And I think what you're really trying to say is the most important word that we probably haven't mentioned is balance. Is that fair? >> Yeah, I think that's good. Balance it. Balance the risks. Balance the trade-offs. Absolutely. Don't bet the farm. >> Yeah. Yeah. >> Terrific. All right. So getting down to brass tax given your uh study of money and by the way I think you have I'm very impressed in the thoughtful way that you have presented this because they're difficult topics. We all have them in the back of our mind and you've done a great job uh of putting pen to paper and coming up with some concepts that I think people would be very well advised to take a peek at. Having done all this, uh, this is sort of a canned question because I know the answer. Given your studies, what are the best forms of money currently available? >> Yeah. Well, thank you for the kind words. I really appreciate it. Um, best best forms of money. Gold and silver are the bread and butter. I would also put Bitcoin in that camp. >> And that's the entire list. It's those three. It's it's gold, silver, and Bitcoin. But I'd put an asterisk around Bitcoin, which is kind of all three actually, but it's maybe a bigger asterisk around Bitcoin. But you probably shouldn't buy anything that you don't understand. >> That's kind of just like true for everybody across the board. So I think gold is probably the easiest to understand. Silver is the second easiest. And then silver is a very very excuse me, Bitcoin is a very very distant third. Um, Bitcoin's super weird. So if you don't get it, if you don't understand it, don't buy it. Like you don't absolutely do not buy it. So you got to take the time to learn about it. Um and then even after learning about it, it might not be right for you. So yeah, those are the three gold, silver, and going to be another question is whether silver gets an honorary mention or a full mention in your definition of money. So you're putting silver up there with gold. Yeah, I put silver up there with gold again with an asterisk because it's hard to it's hard to just like say something is one thing definitively no matter what. Um it's interesting that silver >> sometimes doesn't act like a store of value. And I what I mean by that is if you put your energy into silver let's say you have a whole bunch of silver you know a couple hundred years ago you that's just what you save as money. So it's all silver. Periodically, every century or two, there's a gigantic silver discovery somewhere in the world and there's a massive supply of silver. And what used to be, let's say, energetically hard to acquire all of the sudden becomes energetically easy to acquire. >> And when something can be acquired for very little energy, it ceases to be a store of value. So temporarily, silver ceases to be a store of value. And sometimes it's a couple decades. And so over a human lifetime, that's not really viable. If it was like one or two years, you could probably ride it out. But if it's 20, 30 years, that could be the rest of your life depending, you know, depending how long you live and conditions of the world. And that's exactly why the dollar and fiat currencies are not a store of value. They're too easy to produce. Doesn't doesn't take any energy to print these. And so because silver sometimes there's periodically those big discoveries and silver is actually so useful as a metal that there isn't a very large stockpile above ground. And so when we do have these big silver discoveries on a percentage basis the silver the available silver supply goes up a very large percentage. And the same thing doesn't really happen with gold because there's so much gold above ground that if you get a comparable size discovery of gold, same number of ounces, let's say, on a percentage basis, it's not it's not as impactful. And so temporarily, maybe for a year or two or three, gold becomes easier to produce, but that's not a big deal when you're holding it for a 10 or 20 or 30 year timeline. So I would count silver as money with that asterisk of you know don't put all your eggs in one basket every now and then periodically and we don't know when it's going to be there's some discovery and silver loses that property of arduousness that was the 11th property out of 12 arduous meaning it takes more energy to make each marginal unit. Um so every once in a while that disappears for silver and then it comes back. So I do think silver's money. Um but just with that caveat >> and I would give you my footnote which is a little different which is because a little over you know half well some percentage of silver 50 60 70 is industrial uh silver and gold perform differently in recessions. Would you concede that? >> Would I concede it? Yes. Absolutely. Of course. Absolutely. Yeah. So that's the other thing folks I think have to keep in mind in in looking at silver as as money in a store of value is that industrial component. So um just looking at the past year and this is sort of a loaded question but I have to have at least one or two. If we look over the I will admit and I'm telling viewers that when I spoke with you earlier today, you genuinely did not seem to know where Bitcoin was trading, which I found fascinating. And you proved it by giving me the wrong number, which I thought at least Bitcoin folks knew checked in once a day, but you really didn't have a close grip on where Bitcoin was trading, which I thought was fascinating. But if we look over the past year, Bitcoin's down about 6 and a half% and obviously from the peak which was in midocctober of 126,000 it closed the year uh around 88,000 I believe 87,000. Um and spot gold on the other hand is having its moment in the sun. you know, up 65%. We all know silver's up 147%. And I mean, January is not even over and gold's up 17.5%. And I, this is truly an amazing stat. I had to do the math to write it down. Silver's up 47% in January after being, you know, it's So, my question to you is what? Why? Okay, let me rephrase it. I've read a lot about people trying to make a lot of that that Bitcoin's not functioning as a store of value and obviously these are very short-term things but do you attribute anything to that or do you still look at all of this as noise? >> Yeah. So is Bitcoin a store of value basically and is there any merit to the criticisms that it's not? >> Right. Um so it's a very important question and I think it has a lot of nuance. So as you point out yeah it's a loaded question. So it does depend on well anything depends on your definition right. So we've talked about the definition of money and currency the definition of saving and investing the definition of all these things. So again another definition point um according to my definition of a store of value which you know in order to store your value in order to store value okay what is value the value you're storing is the energy you spent to acquire it so if I go to acquire an ounce of gold and it's $5,000 however much energy I had to spend to either earn $5,000 and then trade it for this or maybe I just traded for this directly or whatever I spent a whole bunch of energy. And again, if if this is going to store my value, then I should be able to wait any amount of time and then release it and get all that energy back and entice someone else to do labor for me. So that's what a store of value is. So it really boils down to the energy. >> By the way, you need a prop for Bitcoin. >> I know. I know. I need a >> You need one of those little Bitcoin coins. >> Yeah. Oh yeah, that's a good idea. I should go. >> But that'll make it confusing. So you really can't do that. But anyway, go ahead. >> Yeah. Yeah. So Okay. So that's the the goal of a store of value. It boils down to the energy that you're spending. And perhaps one one source of confusion, okay, one source of confusion is people get caught up on price. They think, okay, if I buy some if I buy gold at $5,000 and then it goes down to 4500, it's not a store of value or it wasn't a store of value over that period of time. And you can see all kinds of financial commentators, blog posts, news articles where they'll actually say that. They'll say, "Oh, gold was down 1.3% this week, not really acting like a store of value." >> But US treasuries on the other hand were, you know, and it's like like that's not what it is. >> So, um, they they are talking about a store of price. So, if you want, if you want to buy something at a certain price and make sure it never goes below that price, just hold dollars. A dollar will always be a dollar. you'll never sell this and get 98 cents. So if you if you want a store of price, just hold the currency of your country and you've got a store of price. And I think then you come kind of full circle to the original problem which is like, oh yeah, but fiat currencies aren't a store of value. So now the qu now you revisit the question, okay, well then what am I trying to store? Now, perhaps to answer the question better, we can go back to a time when we were on the gold standard when an ounce of gold was roughly worth a $20 bill and you could exchange them. And during that era, like a hundred years, the dollar acted like a store of value because it was pegged to a gold coin. And so, a store of price and a store of value were the same. They were the same thing. And then in 1971, basically, or maybe you could argue beforehand, but just simplify it. 1971 we go off the gold standard. Then everyone has to choose. Do you want a store of price or do you want a store of value? Because you can't have both at the same time. All of the sudden it becomes a dilemma. And so again, if you want a store of price, hold dollars. If you want a store of value, you need something with a reasonable expectation of giving you back the same energy you put in. But you're trying to anticipate the future. And nobody knows the future. I don't know if the price of gold or the amount of energy that I could get by exchanging it is going to be higher or lower tomorrow. I have no idea. But thankfully, I don't care what it is tomorrow. I care what it is 20 years from now. And it's going to be higher. I know it's going to be higher. So, or let's say I have very high conviction. Pro probabilistically, I'm betting that by the time I actually need the energy that I could get by exchanging this, I'm almost certainly going to get more than I put into when I acquired it. And I would put silver in that c well, I don't know how how deep we want to go into silver right now, but I would put Bitcoin in that category as well. >> So, that's key. the Bitcoin, you're willing to take that volatility, which is obviously Bitcoin's drawback so far because your time frame in storing your energy in Bitcoin is longer than say the next 5 to 10 years. Is that fair? >> Bingo. That's exactly it. So, that portion of my portfolio I do not plan on using in the near future, the next few years. And so, I don't even check the price of Bitcoin. I check it once a month. Seriously, I check it on the first of every month just out of curiosity. >> I'm telling you, he didn't know the price today. >> I didn't know. I never know. And uh so, so it's been, you know, we're coming up on February 1st, so it's been like almost a full month since I looked. I didn't know if it was up or down. >> Uhhuh. >> So, um so yeah, that's exactly why it's because my time horizon is so long, and I do have a reasonable expectation that in the very far future, I'll be able to get more energy out of it than I put into it when I acquired it. >> Great. So, we're we're running out of time. I was going to ask you about the role of gold equities in a portfolio, but we're going to skip that question because I think uh people who have listened to this conversation to this point understand the uh blend and benefits of speculation that gold equities bring. we don't really need to go over but so what I'd like to end with and I think this is really really fascinating as you sit back and you think about everything you've studied and learned and what we've talked about do you think the world is already on the path of evolving from the dollar standard system the dollar he global monetary order uh I've been talking about it for 25 years and you know even though gold's gone gone from 250 to 5,000. It's been slow. We haven't had the hockey, you know, and the dollar has held together. The Fed still has credibility. All of these things that I would have thought would run their course 10 years ago are still holding together. But the way gold's acting, the way silver's acting, um, we've obviously hit some inflection points. I call them the big three, the deficit, the anti-doll, and the Fed. Clearly, we've hit an inflection point, but do you think that it's clear that we're developing a new monetary regime in the world? And if so, what role do you think gold uh you know, and Bitcoin will play? >> Yes, I do think that we are headed that direction. Yes, the wheels are in motion. Yes, the the dollar price of gold and silver going pretty vertical lately. Um is also a sign of the dollar going vertically down towards the ground. So you just flip the chart upside down and that's that's the price of the dollar or the value of the dollar depending how you want to how you want to label it. Uh so yeah, the dollar is is falling apart. Um yes, we're going to get a new monetary system. I don't know when. I know that Trump has talked about wanting to back the dollar with gold. He said that several times. He said that before he became president the first time and he's made various comments along the way, >> you know, across that um however many years it's been, >> nine, 10 years. Um, and Treasury Secretary Scott Bent has also said that he wants to be a part of the the next monetary system, the new Breton Woods, he said, and he thinks it's going to happen in the next four years, meaning the the Trump administration. So, yes, that's happening. You know, you look at what happened in Venezuela. You know, Trump goes in and, you know, kidnaps Maduro. you know that's all about gold and oil the petro dollar and bypassing swift with like a black market you know settlement uh payment system you know you look at Russ sanctions against Russia and freezing of Russian assets in 2022 I mean the everything that's going on on the main stage in the world is I'm tempted to say grasping at straws but it's certainly the US having their back up against the wall having to do something absolutely having to intervene one way or another. Um, and solving solving the uh the fiscal problem at home is virtually impossible. I mean, the dollar has to be inflated away. And so I think in order to reestablish, it's funny you said the Fed the Fed still has credibility and I guess on some level of course it does, you know, because it still exists, but I forgot that it has credibility, right? >> Um, 2021 was the end for me. The 120 billion of monthly QE with GDP at six and unemployment down from 148 to 5 and CPI on at five on the way to seven. But 120 billion of QE every month all the way through December of that year u was that that was the end for me. I mean I and of course they don't the Fed hasn't uh been contrite at all about their contribution uh to the inflationary outbreak there thereafter. But in terms of gold do you like we all talk about a cover clause which is say 25% of everybody's balance sheet central bank balance sheets would have to be uh denominated in gold. Do do you see that type of an official role? Like obviously central banks were buying 400 tons a year for a decade. Now it's twice that and Russian freezing of FX reserves. But do you think gold will actually be a part of the new monetary regime? >> Yes, I think it will be gold. I do not think it'll be silver. I do not think it will be Bitcoin. And if I had to design it myself, what do I think is best for the world? I also think gold would be best. No question. Mhm. >> So, um, and there's a lot of reasons. So, yeah, I think it will be gold. I do think there'll be some percentage, some cover clause, as you point out. I don't know what the number will be. I mean, I have no no insight into that. I would I would only be guessing. Um, but there was an article on Zero Hedge a couple years ago that that identified that a lot of European central banks were were right sizing their gold to GDP levels. So, some were selling off, some were buying, and they were sort of getting around the same gold to GDP level. Can't be a coincidence, right? So, that that's there's some kind of coordination going on that's been in place for years, probably in anticipation of exactly what you're talking about. >> And uh I don't know the a very interesting d. So, it it's a certainty in my mind that gold will be involved. Yes, it's a certainty in my mind. Some open questions that I don't know are when does it happen? And one of the most fascinating elements of game theory in play is that Trump really I think really wants to have his name on the deal. I think he really wants to be the guy who did it >> uh for a lot of reasons. However, he's going to be negotiating with Putin, Xi Jinping, other world leaders who really are in no hurry. >> Trump's in a hurry. like he knows what day he leaves office. The other guys, they they got time to kill. They can wait him out. And so I think Trump is in this difficult position of >> Great point. >> Either having to accept a crappy deal for the United States and then spin it as awesome, >> which probably will happen, or just having no deal at all. So I I mean I I don't know. It'll be amazing to watch it unfold. Um but yeah, I think gold will be involved. Just um la last point here is that even if you just like magically back the dollar by gold, that solves some problems but reintroduces so many more. Like the government would have to like cancel everything, cancel social security, cancel just all so much federal spending, break all kinds of promises, default on a lot of its debt, and like that's that's like either a civil war or it's World War II. like when you do something of that magnitude, like you you it's not an option. And so you can't just you can't just magically back the dollar with gold, as nice as it would be if that could happen. Um there's just the problem of all the debt and you know, all the outstanding obligations and the whole interconnectedness of all the pieces globally and and within borders. So it's a really really delicate thing. I don't know how they're going to navigate it, but it it has to involve gold to instill confidence. There's nothing else that could go there. >> Um, so we'll see what happens. >> I'm gonna get you a bunch of hate mail in your inbox from the Bitcoin maximalists, but could we close with just a footnote, not a big point, on why Bitcoin is unlikely to be the backbone of the monetary system >> of the world moving forward because there are certainly a lot of people who think it will be. >> Yeah. So, what I'll say is I love Bitcoin and I actually have more Bitcoin than I have gold. Um, I'm I'm a huge Bitcoin guy. The reason it won't be Bitcoin is because Bitcoin is too young. It's too volatile. It's doesn't have a large enough market cap. Um, you don't have enough central banks that already own it. It does it has a massive branding risk where if you say if the if the government of any country let's say take take the United States if if Trump came out and said by executive order the dollar is now backed by Bitcoin you would have so many people rioting that it was a scam that it was a Ponzi scheme. >> If if a country says we're backing the dollar with gold nobody would be upset. You wouldn't have riots. You wouldn't have backlash. Everyone's okay with it. people, some people are actively terrified of Bitcoin. They don't get it. So, there's a huge branding risk. Bitcoin just simply has to be far more mature in order to play a role like that officially. I suspect it'll happen eventually, but I don't know 30, 40 years from now. It'll be I think it'll be a long time because there's a tremendous urgency now to get something different. It's going to be gold and presumably whatever they come up with will last like a generation. I'm thinking unless they do a really terrible deal, it'll fall apart like within 10 years, which could be funny in its own way. But yeah, >> and one last footnote, you were pointing out that Trump and Bessant, Bessant used to be my boss at Soros. I managed some some money in gold equity, so he was directly my boss. I actually know him pretty well. And I've said the guy is very brilliant. But we're watching a fellow, you know, he's a billionaire. He had his own hedge fund after Soros. And he's putting academically and intellectually, he's one of the smartest people in the world, but he's putting it on the world stage, which is going to prove difficult, if you know what I mean. We're on such a big scale. And along the lines of what you just said, even though Trump and Bessant and Judy Shelton and all these people want to be, you know, at the cusp, part of what we did in Venezuela is the opposite. I just want to point that out. That's sort of an opposite footnote is that the petro dollar relationship is still important enough that we went in there and you called it kidnapping, we abducted him, whatever the heck we're going to call it. By the way, isn't it funny we never hear about him anymore? I know the biggest thing in the world. The guy's in jail in lower Manhattan and we never never hear about it anymore. But that was all, you know, like we can't let the dollar get too weak either. Anyway, it's an interesting dichotomy. The tensions are great. Um, thank you for your time. I want to point out again the hidden secrets of value. Uh, and I encourage all wealthy uh viewers to just take a peek at it. you don't have to watch every minute, but I'd click on them uh because they're really really interesting concepts and I think Allan has done a fantastic job uh of coming up with a great nomenclature on how we can look at these very important questions about what's money and what's value. So Allan, thanks for your time. Uh and we'll be bugging you again in three months to see how you're doing. >> Well, thank you Trey. I really appreciate it. This was a lot of fun. So thank you. >> Thanks. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hard Assets Alliance, at hardassetsallalliance.com. That's hardassallalliance.com.
What Is Real Money? Why Dollars Aren’t Savings & Gold Returns | @Goldsilver's Alan Hibbard
Summary
Transcript
If you're holding on to dollars, that is not saving. Like, if you just have a bunch of these in your pocket or your bank account, you think of that as saving. You speak of it as saving. That is not saving. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Greetings and welcome to our Wealthy Show. My name is Trey Reich and we're here today with Alan Hibbert who I would say along with Larry Leard is probably one of the most influential voices in the crusade for the benefits of hard money today. So Allan currently hangs his hat at least primarily as a strategist and commentator at gold and silver.com uh which I think a lot of wealthy viewers are pretty familiar with. Uh but most recently Allan has released, launched, produced a six-part series on golds.com uh entitled the hidden secrets of value uh which is essentially Allen's personal journey of understanding the difference uh between money and value. uh if it's okay with our viewers, I thought we would delve into uh a little bit of each of the six episodes uh that Allan I'm sure will be happy to give us brief synopsis thereof. So uh the first chapter in this journey is savings versus investing and this particular segment picks up on the difference between price and value. uh and you introduced uh the term or concept of entropy in a system and how entropy is reduced uh by making energy more ordered and less random. Um so can you give us a synopsis of of chapter one? >> Yeah. Well, thank you Trey for having me. Good to be with you today. Um chapter one, saving versus investing. A lot of people might be tempted to skip over this. Yeah. Yeah. I understand. I save a bunch of dollars. Fine. They lose value. So, I better invest that way I can acrue value. And I would actually push back on that right off the bat. And I think that if you're holding on to dollars, that is not saving. Like if you just have a bunch of these in your pocket or your bank account, you think of that as saving. You speak of it as saving. That is not saving. >> So, what I would say to absolutely start the conversation is saving means preserving your value, your hard-earned value. So whatever you use your time and energy to do to create things let's say you build websites for a living or you're an accountant or you're a truck driver whatever you do to acrue value maybe in the form of currency or money if you want to protect it your intention is to save and the way you do that is not by holding dollars or fiat currencies you got to hold real money and so the the the classic example of that is gold and silver I have an ounce of each right here they're always next to me um gold and silver that's real saving I would also lump Bitcoin into that category, but we can we can talk about that later. Um, but that's saving. And a lot of people talk about, oh, if you if you hold gold or silver, you're a gold investor or you're a silver investor. We use the word investor. >> And again, I would just push back a little bit and encourage people to reframe it and say if you're just holding the physical asset, you're saving and you're protecting your value. And uh investing is when you actually risk your value to try to acrue more which is a very different strategy. There's a different intention. And last thing I'll say on this point is the thing that pains me the most when I look at society in general is how pretty much everybody who is an investor who has a 401k or you know brokerage account or whatever almost everybody is a reluctant investor. They're really just trying to keep what they have and they're trying to beat inflation so that they can actually retire off the fruits of their labor and for thousands of years everybody could like you know anything you acrewed throughout your lifetime was enough to sustain you just by saving and you didn't have to invest you didn't have to find businesses to you know lend money to or support financially. Um, so, so episode one is the difference between saving and investing. And if you can reframe that and realize that holding gold and silver is saving, that's a starting point. And then taking risks to do anything else, that's investing. And that's that should be optional for everybody above and beyond. Um, that's a really good place to start before going any further in the series. And we're going to get uh to investing later again. But I think another sort of introductory concept for most people and uh I don't mean to be dimminionative but I think most people most investors would fail to differentiate between money and currency. I think a lot of us I think the vast majority of investors would suggest money and currency are essentially equivalent. Uh therefore, as you point out, millions of investors store their hard-earned wealth and energy and assets that are actually designed to lose value over time. I mean, it's a pretty remarkable concept and I think the short description of this concept is fiat currency, but can you give us a little input here? >> Yeah, exactly. So, episode two, as you point out, is the difference between money and currency. And there's really two separate use cases that you can think about here. Uh, one is storing your value. The other is transporting or moving your value. And it's kind of like the difference between a house and a car, right? A house is a store of your valuables, including yourself, like while you're in it, while you're sleeping. It's protecting you from the elements so you don't get rained on in the middle of the night. However, a car transports your valuables, right? Or a subway or a metro, anything. Um, and these are two completely different use cases. And so, in the financial realm, gold is money. It's designed to store your value. It just sits there. It's very good at just sitting there. That's what it does. And so, people criticize it. They say, "Gold has no yield. Gold has no cash flow, no dividends." It's not supposed to. It's supposed to store your wealth. It's not supposed to risk it to try to get more. On the other hand, currency is optimized to move value around. It's very good for transacting. And in order to be really good at transacting, it has to reduce friction. All the different points of friction um that you might encounter when transacting with somebody. But in order to be really good at movement, it has to give up the ability to store value over time. It's just it's just a design trade-off. It's a dilemma. And so money and currency are two different solutions to two different problems. They're both good and useful and valuable, but the problem that people run into, like you said, is that they think about currency as if it were money and they just hold on to it for a long period of time and they're losing value the longer that they hold it. So, one of the things that's really important for people like as a as a basic framework is to think, okay, if I have if I have expenses or anything I need to spend value on, if I have to spend currency on it in the near future, I should probably have currency. But if I want to save my value for the long term, I should probably assign that to money. I should put that into money and hold that for a long time. So, that's the difference between money and currency. And I'm going to sort of complicate things by flipping this around in my 25 years and talking about gold as money. Uh I you I and I'm sure you and everyone frequently encounters well there's no utility for gold. You can't eat it. You can't put it in your gas tank and you can't put it in your roof. And I'm going to outdo you a little with my money in my pocket. But I always >> currency currency in your pocket. And I always tell people, when was the last time you ate a $50 bill or put it in your gas tank or tried to put it in your roof? That's not what money is for. So in fact, if money has if the form of value that you're talking about has utility, it decreases in my opinion its value as a store of value over time. So it's kind of an interesting uh conflict there. So, chapter three and um I'm going to see if you can remember all 12, but chapter chapter three we talk about I used to mention like four portable, durable, divisible, but you've expanded it a bit. I don't know if you want to talk about all 12, but um I think there are lots of different categories for what people consider as money. And the question is as you look at each one of these categories, does it allow you to store effort and energy? Um, you know, money is what you want when there's nothing else you want and it represents pure optionality and stored energy. Uh, it's a receipt, as you point out, of valuable work done. But if we're going to cut it down to how we would look at say the dollar or bitcoin or gold or seashells or whatever you want to throw in the equation, what are your uh characteristics of what defines a good money? >> Yeah, good question. And so I came up with 12 properties of money. Um, but I think rather than going I can go through some of the 12, but I think maybe a better framework for our audience is to >> when you're lying in bed at night, what are the four that come to mind first? >> It depends a little bit. So here here's where they come from that's maybe more interesting. Okay, >> where where it comes from is, okay, let's suppose I go out and I work all day or all week or however long it takes and I amass, you know, one gold coin worth of value. Okay, five over $5,000 now. Um, so the question is, I just exerted a whole bunch of labor, whole bunch of energy. What I don't want to happen is I wait some amount of time, like a year, and then I go to give this to somebody and everyone just says, "No, I don't want it." And it's like, well, shoot, th this, if that happens, this would have been a really bad choice, right? I should have I should have held something else. That could happen with dollars. Maybe I could sit on a stack of $5,000. And I go to give them to someone and they say, "Nope, won't take them." So So what is the problem? The problem is I have all this energy now or let's say this week. I'm going to work really hard, create something valuable for somebody and they're going to compensate me with something, an item, a unit, an ounce of gold, whatever it is. So my challenge is what do I put that energy into so that I can go an arbitrary amount of time, an arbitrary distance across the world and then unleash it by giving it to somebody and entice that person to exert just as much energy as I spent when I acquired it in the first place. >> That's the problem. And if you think through all these different scenarios of how that might go wrong, you can come up with solutions that are really the 12 properties of money. >> So, just as one example, portable. Okay, let's pretend I I work really hard and I get like a car, like a $5,000 car, a beater. Um, but it doesn't drive. There's no wheels on it. It just it's on cinder blocks. It just sits there. Well, that's not great because if I go across the country, I'm how am I going to get that car with me? I'd have to tow it or somehow get it into working condition. So, that thing in its current state is not portable. So, in order for me to move it to wherever I want to go, I would have to exert so much additional energy >> in order to keep my receipt of energy. >> That's not a good deal. >> So, that's why we want our money to be portable. Okay? We also want it to be durable. So if I use something like a car for example and it just starts rusting, right? It oxidizes, it just rusts. Well, it's not durable. It's not going to retain value over time. So portable, durable, divisible, fungeible, all these different things. They're all different solutions to potential problems you would have. And every single problem is your energy would leak in your effort to maintain your energy. So, you don't want your energy to leak. So, you can think through all the possible ways. How might my energy leak? And those are all the properties you want your money to have. And I came up with 12 of them. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. >> So, you mentioned the first four, but I'm just going to be a little bit of a book rat and give everyone else the other eight. So he mentioned portable and I want everyone to think about this. Think about this. These aren't just adjectives. They're really important concepts. So portable makes sense. Durable obviously divisible that what's allows you to buy a cup of coffee and get change. Fungeible meaning you can take that gold coin to anywhere in the world in India, Pakistan, Sri Lanka and you can e easily establish its value. quantifiable, recognizable, desirable, which is a very good point, liquid, secure, verifiable, which I guess with silver coins is a little more difficult than gold coins. It's pretty easy to guarantee that they're gold, arduous, and here's the new concept, decentralized. So, we're going to get back to that in a minute, but uh chapter I think we're up to four uh is physics of money. Excuse me, three. Um and this is an interesting concept. Money as a physical force as opposed to just a financial tool. Let me say that again. Money as a physical force as opposed to just a financial tool. and entropy here being the unseen enemy of wealth. So I if you could give us a little bit on the concept of entropy and how you apply that to your view of money. >> Yeah, definitely. So entropy is one of those weird words and aside from arduous I think it might be the only the only one that really needs explanation. Um so entropy is a measure of how spread out energy is in a system. >> Mh. And so it's kind of like a golf score in the sense that high entropy or a high golf score is bad. And if you're good at golf or if you have a neatly ordered system, you have a low score, you have low entropy. And and we we want our systems, right? Whether they're monetary systems or, you know, your calendar or your kitchen or your bedroom, we want our systems to be organized and neat in a low entropy state because they're just more useful to us. And when energy is spread out closer to random, things are less useful. So may maybe one other way I'll explain it is with a deck of cards. If you open a brand new deck of cards, 52 cards, you can scroll through them and they're all in order. They're all sequential. That's a really low entropy state. That's very useful. You could do all kinds of things with that. Now, if you shuffle them up and they're in a random order, you know, you can still do I mean, you could like deal out a hand of cards, but there's less >> Yeah. Exactly. Exactly. And uh so so the shuffle deck has a higher entropy. It's more random. And one way you know that it's more random is you could take any two out of the 52 cards and switch their places and then show the deck to somebody and from their perspective it would still look the same. It would still look random. But if you started with that brand new deck and you switched two of the cards it it would immediately jump out. You'd say, "Why are those two cards out of order?" You would immediately know that there was there there was something disorganized about it. So those low entropy states are super valuable and they're non-random like someone definitely deliberately created that sequencing and high entropy states are random. They're less useful. Um you know no sign of intelligent life if you will. Um and so what does that mean for money? Okay. Well, I just mentioned a minute ago that the problem that we have with money is that we have energy and we use it now and we want to save it for later and we want to store it in some kind of vessel across time and space so that we can release that same amount of energy in the future. However, the second law of thermodynamics says the entropy of the universe is always increasing. And what that means is energy is always tending to spread out everywhere. everywhere in your body, in your bedroom, in your company, right? Everyone's just constantly getting slightly more disorganized over time. Everyone everywhere. And it's your job as a conscious being to provide order, provide structure. You know, you make your bed every morning, you do the dishes, you whatever it is, and you you put energy into maintaining a low entropy state. And so money le or or any any unit that you might try to use as money, let's put it that way, any any asset whether you know whatever it is, it is subjected to the forces of entropy like anything else. And that energy is going to tend to leak over time. And so your job in my mind is to select an asset that is as resistant to entropy as it possibly can be. >> And that's money. That's a store of value. And then the last thing I'll say in contrast going back to currency something like the dollar the dollar is solving a different problem. Instead of trying to minimize entropy like money currency is trying to minimize friction. It's a completely different problem completely different use case. And so any good currency minimizes friction so you can move it around. If you know any anything about physics friction only arises when you try to move. When anything tries to move it encounters friction. And so that's already a clue that a currency is designed to move. And so if you can design an asset that reduces friction, you have a fantastic currency. But I'm willing to bet that it's not going to be a store of value because it's not going to resist entropy. So does that make sense? >> 100%. >> Okay. >> So uh bringing this to a bit of a conclusion in the next uh section, which is designing perfect money. I wrote this down because it really hit me as a great way to uh put this out as a contrast. But uh you wrote a good money will forego scalability to achieve maximum security and decentralization. A good currency will forego decentralization to achieve maximum scalability and security. Can you talk about that? Yeah. Uh it might be easier with some visuals. Uh but yeah, I'll talk about it. Maybe you can add them in post. Um but uh there's there's a three-way trillemma. So I think I think people are familiar with a dilemma like you can't have two things. You want two things, but you can't have both because they're kind of mutually exclusive. Like you want to stay home and relax, but you also want to go to the party. >> You you got to pick one or the other. So when it comes to designing these assets, there's a three-way trillemma where we want three different things, but we can only pick two of them. And the three things we want, we want scalability. So we want to be able to have a lot of transactions very quickly uh individually. Like I want to be able to make a lot of transactions quickly, but also all of us, we all want to make a lot of transactions quickly. So like Visa handles something like a 100,000 transactions per second maybe or or it has the capacity to a lot of transactions per second. That's a lot of scalability. And we also want the network to be able to grow so we can accommodate 8 billion people transacting at the same time and so forth. So we want a lot of scalability. That would be lovely. We also want a lot of decentralization. And decentralization means that no no entity or no no subset of the network has special permissions that the other users don't have. Mhm. >> So, um, any type of government is centralized because obviously the government can do things that the citizens cannot. A company is centralized. The CEO can do things that the the other people cannot and so forth. But something like gold is decentralized. It's all over the earth. If you want to go out and try to find it in your backyard, you know, go for it. Um, so no, no one says how many protons and electrons are in an ounce of gold. No one says whether it conducts electricity or not. No one has control over that. It's completely decentralized. So, anyone who interacts with gold has the same permissions as everyone else. So, gold is decentralized. And we would love for our monetary systems to be completely decentralized because then we could trust them more. Um, you know, if you've ever had a company or a country, betray your trust. You know what I'm talking about. So, and the third thing we want, so scalability, decentralization, we also want security. That one kind of doesn't really need an explanation. Basically, you don't want anyone creating counterfeits. um or or double spending their money. Um you know, photocopying a dollar and then then spending a dollar two different times. You don't want people doing that. You want them the unit of money to be very secure. So, we would like to have all three, but unfortunately, you can only pick two at a time. And you can pick two and get really good at them, or you can be pretty lousy and try to do all three. And just just to give an example of a lousy version, most of the crypto of the 20,000 however many thousands cryptocurrencies are out there, most of them are a lousy version of all three. They're trying to do all three and they're just absolutely terrible. There's no use case for for crap like that. >> Um, some have realized, okay, we have to sacrifice one thing. They all sacrifice decentralization. That way they can continue to be a company and, you know, control their product. No big deal. And then they do the other two things really well. They say, "We're going to be as secure as we possibly can and we're going to make our network super scalable." So if you ever go on a cryptocurrency's website, it's without a doubt they they almost all say we're 1,000 times faster than Bitcoin. You know, like they're comparing apples to oranges. It's like someone who has a Honda Civic and saying we are way faster than that guy's house. >> It's like, well, houses aren't supposed to move. So Bitcoin isn't supposed to move. Gold isn't supposed to move. Um, anyways, so yeah, do you want to jump in? >> Well, since you brought this up, and I was going to get to Bitcoin a little later, but this is a great uh pause or segue. Does Bitcoin is part of the attraction of Bitcoin, which is obviously a very very strong attraction that it comes closest to solving the trillemma. >> Oo, I thought you were going to phrase the question differently. Um, a lot of people think that Bitcoin solves the trillemma. I do not I think that Bitcoin is the simplest way to understand it if you understand what gold is I would say that Bitcoin is digital gold >> and Bitcoin and gold as monies you know using my vocabulary here >> they choose to sacrifice scalability and they go after the other two they go after um security and decentralization so nobody using Bitcoin has any permission that anyone else using Bitcoin doesn't have just like gold so it's totally decentralized Um, and they're both very secure. Gold, very hard to counterfeit gold. Very hard to counterfeit Bitcoin. >> They're both very, very, very secure. Um, and so they sacrifice scalability. So if you think about the the Bitcoin network, I I think the transactions per second are like seven seven transactions per second, like total for the whole network. >> So if seven people are trying to transact at the same time, buy a cup of coffee or groceries, whatever it is, >> there's going to be a huge bottleneck in the system. And and that's why nobody uses Bitcoin as a currency. It's it's effectively a failed currency and that's >> that's really no secret. Um so all these different curren excuse me all these different companies tried accepting Bitcoin as a currency a few years ago. Um you know the Microsoft and Dell and Overstock and Wikipedia or >> Tesla. Exactly. And you know a couple months goes by and then they say all right we changed our minds. We're not doing it because no one wants to pay with it. The fees are too high. Blah blah blah. It's not a currency and I don't think it will be. But since we're talking about episode 5 here of the series, designing the perfect money, what does the perfect money look like? Well, there's sort of a there it's it's almost like a gotcha moment. Like there's a difference between money, designing the perfect money. Like gold is the perfect physical money. I think Bitcoin so far is the perfect digital money. So we we kind of have the perfect money, but that's not where it ends really. What we want to design is the perfect monetary system because if everyone's just using gold and Bitcoin, nobody can buy a cup of coffee. Nobody can buy groceries. Like the economy will stall. It's just not viable. So part of designing the perfect money is realizing that we need currencies to go along with the money. And that's when we actually scale it. So the question becomes, you know, you know, the dollar is not really going away. It just it may get redefined or become worth less over time, okay? But it's not going to disappear. And so the some of these interesting questions become, you know, do we back the dollar with gold? Okay, may maybe physically we do. Maybe in a digital sense, the digital dollar that already exists, the digital dollars that are in our bank accounts. Okay, that digital dollar. Do we back those with gold? Um maybe do we back those with Bitcoin? I don't know. Um I don't think we should, but these are these are questions that that can be discussed. But I think that in order for our society to function well, we do have to have a layer one money, a base money, whether it's gold or bitcoin, separate discussion. Um, but then we scale that with currencies. And so you you really want to have one money at the bottom, like whatever you think is the best at resisting entropy, okay? And then you can scale that with hundreds of currencies, thousands of currencies. They can be government currencies, corporate currencies, you can have airline miles, hotel points, what whatever it is. um you know so there'll be a whole bunch of currency. So so that to me is the dynamics between money and currency and how we might you know design it a perfect version of it. >> Very interesting. So um let's go to chapter six and then we're going to come back to that with some sort of realworld observations about what's going on right now. But your conclusion uh which I mentioned to you before we started actually put me in a good mood uh before we got started which is you know how to get rich and you point out that uh the definition of getting rich is all too often defined as how many shares of Nvidia you know do you own and that type of thing and when did you buy it and flashy numbers and stock tips and winning trades. So uh your point is that uh and I think it's obviously a very important point is winning getting rich uh could be more properly defined as gaining control of your time and your energy uh and your life. And true quote unquote richness uh is built through saving in real money and investing in relationships and as you point out freedom and joy. So, uh, can you give us a few ideas here on how people might gain more, uh, satisfaction and reccalibrating a bit? >> Yeah, definitely. So, yeah, the episode is called How to Get Rich, and I put rich in quotes because it's it's not that financial rich that you're talking about. It's all those other things. And it's tempting or it's all too easy to forget that really what's enjoyable, like what's a sign of a of a happy life or a successful life, it's not the amount of money. It's not the financial piece of life. Like that should support all the other stuff. Like money is important so that you can eat, so that you can go on vacation, so that you can see the kids or the grandkids or whatever it is. Take them to Disney World, you know? you know, money is important, but it's not it's not the thing that we should all be chasing. And I I just see a lot of people um you know, sherking um opportunities to spend time with their family and they're on their phone, you know, refreshing their crypto account or they're refreshing, you know, whatever their brokerage account. It's like, man, like put that thing away. Like somehow you got to construct your financial portfolio so it doesn't take up your attention every day. So you can go a week or two without even thinking about it and you're going to be okay. Like like I just I just see a lot of people setting themselves up to have an energy liability. So it's one thing to have like a liability like debt like mortgage, student loans, credit card payments, all those things. And having all those liabilities on your financial balance sheet is probably not a good idea unless you have, you know, a prudent use of debt. you know, let's say a rental property or something like that. But you can also think about your life using energy like your energy balance sheet, your assets and your liabilities. And people are full of energy liabilities. So that they have to spend energy thinking about something. They have to spend energy, you know, paying attention to something, making some kind of uh trade, checking into an account, making a decision. If something's up or down today, do I buy more? you know. Um, so if you think about it that way and set yourself up so you don't have so many energy liabilities, maybe you can put your portfolio on a little bit of autopilot, maybe trade once or twice a year and just buy things and hold for several years. You probably can be a lot happier in life. You can invest in your relationships. So you could call people on the phone and, you know, spend time with them in person. And, you know, I I think life just gets better when you build it that way. So, I have a few sort of uh ending questions about the real world, and I think you just segueed into one of them. Since you are literally one of the world's foremost experts on like what money really is and what it means to save, how do you approach the balance between savings and speculation? Now, I know you're going to say that's a very personal decision and everyone I mean we're going to do the disclaimer. It depends on your goals and all that, but once we get past that disclaimer, how should the average uh person look at that balance? >> Yeah, it's a good question and those are good disclaimers. Uh I think one of the big epiphanies that I had is that the the math of let's say saving and investing, the math of it is not that hard. It's the emotions that are the hard part. >> So I would I would encourage people to focus on emotional awareness. >> And so when you're trying to decide how to allocate your portfolio, how much do I save, how much do I speculate, I think it's an answer of how much emotional volatility you can tolerate. M >> so if it's going to really hurt you if you take a position in something and then the dollar value of it goes down the next day 1% 10% whatever the number is if that's really going to bother you that's really good information for you to have and you have to build a strategy accordingly >> um >> what that does not how you can build tolerance is one thing I should say you can build tolerance so if if it's the percentage that bothers you I can't you know if it goes down more than 1% I'm going to be really upset okay fine Think about it in terms of dollars. If you like put a $100 into something and if it goes down to 99, okay, you lost $1. Is that is that really upsetting to you? Probably not. Um, so you can build up that emotional tolerance over time. Another thing that's really important to understand is a lot of people delay any kind of investing or risk-taking out of ambiguous fear. They just have this general fear of something going wrong. And if you sit them down and say, "Well, what specifically are you worried about?" They have a hard time articulating it. Just like, "Ah, catastrophe. Ah, I could be homeless." Okay, well, hang on. Like, let's slow it down. You know, be be more clear about what your fear is. >> And you can actually go through an exercise called fear setting. It's a lot like goal setting where you write down your goals and then how you're going to achieve them, but you write down your fears and then how you're going to make sure that they don't happen. So, if you're afraid of, you know, losing your life savings in the stock market, one way you can make sure that doesn't happen is don't put your life savings in the stock market. So, that's pretty simple. Like, you limit your risk. Only put 10% in or some number. So, it sounds kind of obvious, but I just see so many people who never take action and they miss out on all these great moves and, you know, they're jealous of all their friends, but they just they're just crippled by fear. And it's like once you can articulate what your fear is and you realize it's probably not as big of a deal as you think and that there's easy steps you can take um to mitigate them um you'll be a lot better off. So so just more precisely to your point, how do you figure out the difference between saving versus speculating and and what the balance is? It's it's guess and check. There's no perfect answer. It is it is dependent on the person and you'll tweak it as you go and try to enjoy the process. Realize you're going to make mistakes. Everyone makes mistakes. You're going to buy something and then regret it and say, "Ah, I should have waited, or I should have bought three years earlier, or I should have bought this other thing instead." It's going to happen. Don't be afraid of making mistakes. Just mitigate the downside of each mistake and frame it as tuition in the school of life. It's just a price to pay to learn. And any mistake you make with $100, you can get it right with $1,000. And if you make a mistake with $1,000, you'll get it right with $10,000. And and so on. you can just keep getting better. Don't be afraid of learning. >> So, you're reminding me one of our family friends is famous for the phrase everything in moderation. And I think what you're really trying to say is the most important word that we probably haven't mentioned is balance. Is that fair? >> Yeah, I think that's good. Balance it. Balance the risks. Balance the trade-offs. Absolutely. Don't bet the farm. >> Yeah. Yeah. >> Terrific. All right. So getting down to brass tax given your uh study of money and by the way I think you have I'm very impressed in the thoughtful way that you have presented this because they're difficult topics. We all have them in the back of our mind and you've done a great job uh of putting pen to paper and coming up with some concepts that I think people would be very well advised to take a peek at. Having done all this, uh, this is sort of a canned question because I know the answer. Given your studies, what are the best forms of money currently available? >> Yeah. Well, thank you for the kind words. I really appreciate it. Um, best best forms of money. Gold and silver are the bread and butter. I would also put Bitcoin in that camp. >> And that's the entire list. It's those three. It's it's gold, silver, and Bitcoin. But I'd put an asterisk around Bitcoin, which is kind of all three actually, but it's maybe a bigger asterisk around Bitcoin. But you probably shouldn't buy anything that you don't understand. >> That's kind of just like true for everybody across the board. So I think gold is probably the easiest to understand. Silver is the second easiest. And then silver is a very very excuse me, Bitcoin is a very very distant third. Um, Bitcoin's super weird. So if you don't get it, if you don't understand it, don't buy it. Like you don't absolutely do not buy it. So you got to take the time to learn about it. Um and then even after learning about it, it might not be right for you. So yeah, those are the three gold, silver, and going to be another question is whether silver gets an honorary mention or a full mention in your definition of money. So you're putting silver up there with gold. Yeah, I put silver up there with gold again with an asterisk because it's hard to it's hard to just like say something is one thing definitively no matter what. Um it's interesting that silver >> sometimes doesn't act like a store of value. And I what I mean by that is if you put your energy into silver let's say you have a whole bunch of silver you know a couple hundred years ago you that's just what you save as money. So it's all silver. Periodically, every century or two, there's a gigantic silver discovery somewhere in the world and there's a massive supply of silver. And what used to be, let's say, energetically hard to acquire all of the sudden becomes energetically easy to acquire. >> And when something can be acquired for very little energy, it ceases to be a store of value. So temporarily, silver ceases to be a store of value. And sometimes it's a couple decades. And so over a human lifetime, that's not really viable. If it was like one or two years, you could probably ride it out. But if it's 20, 30 years, that could be the rest of your life depending, you know, depending how long you live and conditions of the world. And that's exactly why the dollar and fiat currencies are not a store of value. They're too easy to produce. Doesn't doesn't take any energy to print these. And so because silver sometimes there's periodically those big discoveries and silver is actually so useful as a metal that there isn't a very large stockpile above ground. And so when we do have these big silver discoveries on a percentage basis the silver the available silver supply goes up a very large percentage. And the same thing doesn't really happen with gold because there's so much gold above ground that if you get a comparable size discovery of gold, same number of ounces, let's say, on a percentage basis, it's not it's not as impactful. And so temporarily, maybe for a year or two or three, gold becomes easier to produce, but that's not a big deal when you're holding it for a 10 or 20 or 30 year timeline. So I would count silver as money with that asterisk of you know don't put all your eggs in one basket every now and then periodically and we don't know when it's going to be there's some discovery and silver loses that property of arduousness that was the 11th property out of 12 arduous meaning it takes more energy to make each marginal unit. Um so every once in a while that disappears for silver and then it comes back. So I do think silver's money. Um but just with that caveat >> and I would give you my footnote which is a little different which is because a little over you know half well some percentage of silver 50 60 70 is industrial uh silver and gold perform differently in recessions. Would you concede that? >> Would I concede it? Yes. Absolutely. Of course. Absolutely. Yeah. So that's the other thing folks I think have to keep in mind in in looking at silver as as money in a store of value is that industrial component. So um just looking at the past year and this is sort of a loaded question but I have to have at least one or two. If we look over the I will admit and I'm telling viewers that when I spoke with you earlier today, you genuinely did not seem to know where Bitcoin was trading, which I found fascinating. And you proved it by giving me the wrong number, which I thought at least Bitcoin folks knew checked in once a day, but you really didn't have a close grip on where Bitcoin was trading, which I thought was fascinating. But if we look over the past year, Bitcoin's down about 6 and a half% and obviously from the peak which was in midocctober of 126,000 it closed the year uh around 88,000 I believe 87,000. Um and spot gold on the other hand is having its moment in the sun. you know, up 65%. We all know silver's up 147%. And I mean, January is not even over and gold's up 17.5%. And I, this is truly an amazing stat. I had to do the math to write it down. Silver's up 47% in January after being, you know, it's So, my question to you is what? Why? Okay, let me rephrase it. I've read a lot about people trying to make a lot of that that Bitcoin's not functioning as a store of value and obviously these are very short-term things but do you attribute anything to that or do you still look at all of this as noise? >> Yeah. So is Bitcoin a store of value basically and is there any merit to the criticisms that it's not? >> Right. Um so it's a very important question and I think it has a lot of nuance. So as you point out yeah it's a loaded question. So it does depend on well anything depends on your definition right. So we've talked about the definition of money and currency the definition of saving and investing the definition of all these things. So again another definition point um according to my definition of a store of value which you know in order to store your value in order to store value okay what is value the value you're storing is the energy you spent to acquire it so if I go to acquire an ounce of gold and it's $5,000 however much energy I had to spend to either earn $5,000 and then trade it for this or maybe I just traded for this directly or whatever I spent a whole bunch of energy. And again, if if this is going to store my value, then I should be able to wait any amount of time and then release it and get all that energy back and entice someone else to do labor for me. So that's what a store of value is. So it really boils down to the energy. >> By the way, you need a prop for Bitcoin. >> I know. I know. I need a >> You need one of those little Bitcoin coins. >> Yeah. Oh yeah, that's a good idea. I should go. >> But that'll make it confusing. So you really can't do that. But anyway, go ahead. >> Yeah. Yeah. So Okay. So that's the the goal of a store of value. It boils down to the energy that you're spending. And perhaps one one source of confusion, okay, one source of confusion is people get caught up on price. They think, okay, if I buy some if I buy gold at $5,000 and then it goes down to 4500, it's not a store of value or it wasn't a store of value over that period of time. And you can see all kinds of financial commentators, blog posts, news articles where they'll actually say that. They'll say, "Oh, gold was down 1.3% this week, not really acting like a store of value." >> But US treasuries on the other hand were, you know, and it's like like that's not what it is. >> So, um, they they are talking about a store of price. So, if you want, if you want to buy something at a certain price and make sure it never goes below that price, just hold dollars. A dollar will always be a dollar. you'll never sell this and get 98 cents. So if you if you want a store of price, just hold the currency of your country and you've got a store of price. And I think then you come kind of full circle to the original problem which is like, oh yeah, but fiat currencies aren't a store of value. So now the qu now you revisit the question, okay, well then what am I trying to store? Now, perhaps to answer the question better, we can go back to a time when we were on the gold standard when an ounce of gold was roughly worth a $20 bill and you could exchange them. And during that era, like a hundred years, the dollar acted like a store of value because it was pegged to a gold coin. And so, a store of price and a store of value were the same. They were the same thing. And then in 1971, basically, or maybe you could argue beforehand, but just simplify it. 1971 we go off the gold standard. Then everyone has to choose. Do you want a store of price or do you want a store of value? Because you can't have both at the same time. All of the sudden it becomes a dilemma. And so again, if you want a store of price, hold dollars. If you want a store of value, you need something with a reasonable expectation of giving you back the same energy you put in. But you're trying to anticipate the future. And nobody knows the future. I don't know if the price of gold or the amount of energy that I could get by exchanging it is going to be higher or lower tomorrow. I have no idea. But thankfully, I don't care what it is tomorrow. I care what it is 20 years from now. And it's going to be higher. I know it's going to be higher. So, or let's say I have very high conviction. Pro probabilistically, I'm betting that by the time I actually need the energy that I could get by exchanging this, I'm almost certainly going to get more than I put into when I acquired it. And I would put silver in that c well, I don't know how how deep we want to go into silver right now, but I would put Bitcoin in that category as well. >> So, that's key. the Bitcoin, you're willing to take that volatility, which is obviously Bitcoin's drawback so far because your time frame in storing your energy in Bitcoin is longer than say the next 5 to 10 years. Is that fair? >> Bingo. That's exactly it. So, that portion of my portfolio I do not plan on using in the near future, the next few years. And so, I don't even check the price of Bitcoin. I check it once a month. Seriously, I check it on the first of every month just out of curiosity. >> I'm telling you, he didn't know the price today. >> I didn't know. I never know. And uh so, so it's been, you know, we're coming up on February 1st, so it's been like almost a full month since I looked. I didn't know if it was up or down. >> Uhhuh. >> So, um so yeah, that's exactly why it's because my time horizon is so long, and I do have a reasonable expectation that in the very far future, I'll be able to get more energy out of it than I put into it when I acquired it. >> Great. So, we're we're running out of time. I was going to ask you about the role of gold equities in a portfolio, but we're going to skip that question because I think uh people who have listened to this conversation to this point understand the uh blend and benefits of speculation that gold equities bring. we don't really need to go over but so what I'd like to end with and I think this is really really fascinating as you sit back and you think about everything you've studied and learned and what we've talked about do you think the world is already on the path of evolving from the dollar standard system the dollar he global monetary order uh I've been talking about it for 25 years and you know even though gold's gone gone from 250 to 5,000. It's been slow. We haven't had the hockey, you know, and the dollar has held together. The Fed still has credibility. All of these things that I would have thought would run their course 10 years ago are still holding together. But the way gold's acting, the way silver's acting, um, we've obviously hit some inflection points. I call them the big three, the deficit, the anti-doll, and the Fed. Clearly, we've hit an inflection point, but do you think that it's clear that we're developing a new monetary regime in the world? And if so, what role do you think gold uh you know, and Bitcoin will play? >> Yes, I do think that we are headed that direction. Yes, the wheels are in motion. Yes, the the dollar price of gold and silver going pretty vertical lately. Um is also a sign of the dollar going vertically down towards the ground. So you just flip the chart upside down and that's that's the price of the dollar or the value of the dollar depending how you want to how you want to label it. Uh so yeah, the dollar is is falling apart. Um yes, we're going to get a new monetary system. I don't know when. I know that Trump has talked about wanting to back the dollar with gold. He said that several times. He said that before he became president the first time and he's made various comments along the way, >> you know, across that um however many years it's been, >> nine, 10 years. Um, and Treasury Secretary Scott Bent has also said that he wants to be a part of the the next monetary system, the new Breton Woods, he said, and he thinks it's going to happen in the next four years, meaning the the Trump administration. So, yes, that's happening. You know, you look at what happened in Venezuela. You know, Trump goes in and, you know, kidnaps Maduro. you know that's all about gold and oil the petro dollar and bypassing swift with like a black market you know settlement uh payment system you know you look at Russ sanctions against Russia and freezing of Russian assets in 2022 I mean the everything that's going on on the main stage in the world is I'm tempted to say grasping at straws but it's certainly the US having their back up against the wall having to do something absolutely having to intervene one way or another. Um, and solving solving the uh the fiscal problem at home is virtually impossible. I mean, the dollar has to be inflated away. And so I think in order to reestablish, it's funny you said the Fed the Fed still has credibility and I guess on some level of course it does, you know, because it still exists, but I forgot that it has credibility, right? >> Um, 2021 was the end for me. The 120 billion of monthly QE with GDP at six and unemployment down from 148 to 5 and CPI on at five on the way to seven. But 120 billion of QE every month all the way through December of that year u was that that was the end for me. I mean I and of course they don't the Fed hasn't uh been contrite at all about their contribution uh to the inflationary outbreak there thereafter. But in terms of gold do you like we all talk about a cover clause which is say 25% of everybody's balance sheet central bank balance sheets would have to be uh denominated in gold. Do do you see that type of an official role? Like obviously central banks were buying 400 tons a year for a decade. Now it's twice that and Russian freezing of FX reserves. But do you think gold will actually be a part of the new monetary regime? >> Yes, I think it will be gold. I do not think it'll be silver. I do not think it will be Bitcoin. And if I had to design it myself, what do I think is best for the world? I also think gold would be best. No question. Mhm. >> So, um, and there's a lot of reasons. So, yeah, I think it will be gold. I do think there'll be some percentage, some cover clause, as you point out. I don't know what the number will be. I mean, I have no no insight into that. I would I would only be guessing. Um, but there was an article on Zero Hedge a couple years ago that that identified that a lot of European central banks were were right sizing their gold to GDP levels. So, some were selling off, some were buying, and they were sort of getting around the same gold to GDP level. Can't be a coincidence, right? So, that that's there's some kind of coordination going on that's been in place for years, probably in anticipation of exactly what you're talking about. >> And uh I don't know the a very interesting d. So, it it's a certainty in my mind that gold will be involved. Yes, it's a certainty in my mind. Some open questions that I don't know are when does it happen? And one of the most fascinating elements of game theory in play is that Trump really I think really wants to have his name on the deal. I think he really wants to be the guy who did it >> uh for a lot of reasons. However, he's going to be negotiating with Putin, Xi Jinping, other world leaders who really are in no hurry. >> Trump's in a hurry. like he knows what day he leaves office. The other guys, they they got time to kill. They can wait him out. And so I think Trump is in this difficult position of >> Great point. >> Either having to accept a crappy deal for the United States and then spin it as awesome, >> which probably will happen, or just having no deal at all. So I I mean I I don't know. It'll be amazing to watch it unfold. Um but yeah, I think gold will be involved. Just um la last point here is that even if you just like magically back the dollar by gold, that solves some problems but reintroduces so many more. Like the government would have to like cancel everything, cancel social security, cancel just all so much federal spending, break all kinds of promises, default on a lot of its debt, and like that's that's like either a civil war or it's World War II. like when you do something of that magnitude, like you you it's not an option. And so you can't just you can't just magically back the dollar with gold, as nice as it would be if that could happen. Um there's just the problem of all the debt and you know, all the outstanding obligations and the whole interconnectedness of all the pieces globally and and within borders. So it's a really really delicate thing. I don't know how they're going to navigate it, but it it has to involve gold to instill confidence. There's nothing else that could go there. >> Um, so we'll see what happens. >> I'm gonna get you a bunch of hate mail in your inbox from the Bitcoin maximalists, but could we close with just a footnote, not a big point, on why Bitcoin is unlikely to be the backbone of the monetary system >> of the world moving forward because there are certainly a lot of people who think it will be. >> Yeah. So, what I'll say is I love Bitcoin and I actually have more Bitcoin than I have gold. Um, I'm I'm a huge Bitcoin guy. The reason it won't be Bitcoin is because Bitcoin is too young. It's too volatile. It's doesn't have a large enough market cap. Um, you don't have enough central banks that already own it. It does it has a massive branding risk where if you say if the if the government of any country let's say take take the United States if if Trump came out and said by executive order the dollar is now backed by Bitcoin you would have so many people rioting that it was a scam that it was a Ponzi scheme. >> If if a country says we're backing the dollar with gold nobody would be upset. You wouldn't have riots. You wouldn't have backlash. Everyone's okay with it. people, some people are actively terrified of Bitcoin. They don't get it. So, there's a huge branding risk. Bitcoin just simply has to be far more mature in order to play a role like that officially. I suspect it'll happen eventually, but I don't know 30, 40 years from now. It'll be I think it'll be a long time because there's a tremendous urgency now to get something different. It's going to be gold and presumably whatever they come up with will last like a generation. I'm thinking unless they do a really terrible deal, it'll fall apart like within 10 years, which could be funny in its own way. But yeah, >> and one last footnote, you were pointing out that Trump and Bessant, Bessant used to be my boss at Soros. I managed some some money in gold equity, so he was directly my boss. I actually know him pretty well. And I've said the guy is very brilliant. But we're watching a fellow, you know, he's a billionaire. He had his own hedge fund after Soros. And he's putting academically and intellectually, he's one of the smartest people in the world, but he's putting it on the world stage, which is going to prove difficult, if you know what I mean. We're on such a big scale. And along the lines of what you just said, even though Trump and Bessant and Judy Shelton and all these people want to be, you know, at the cusp, part of what we did in Venezuela is the opposite. I just want to point that out. That's sort of an opposite footnote is that the petro dollar relationship is still important enough that we went in there and you called it kidnapping, we abducted him, whatever the heck we're going to call it. By the way, isn't it funny we never hear about him anymore? I know the biggest thing in the world. The guy's in jail in lower Manhattan and we never never hear about it anymore. But that was all, you know, like we can't let the dollar get too weak either. Anyway, it's an interesting dichotomy. The tensions are great. Um, thank you for your time. I want to point out again the hidden secrets of value. Uh, and I encourage all wealthy uh viewers to just take a peek at it. you don't have to watch every minute, but I'd click on them uh because they're really really interesting concepts and I think Allan has done a fantastic job uh of coming up with a great nomenclature on how we can look at these very important questions about what's money and what's value. So Allan, thanks for your time. Uh and we'll be bugging you again in three months to see how you're doing. >> Well, thank you Trey. I really appreciate it. This was a lot of fun. So thank you. >> Thanks. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hard Assets Alliance, at hardassetsallalliance.com. That's hardassallalliance.com.