The Dollar’s 99% Collapse vs Gold | Brett Rentmeester
Summary
Gold as a Store of Value: The podcast emphasizes the importance of gold in preserving purchasing power, especially as the dollar has lost 99% of its purchasing power against gold since 1971.
Historical Context: Discussion on historical instances of currency devaluation, such as the Roman Empire and Zimbabwe, highlighting the risks of excessive money printing.
Current Economic Concerns: The conversation addresses concerns about the U.S. dollar's future, given the current trajectory of debt and money printing, and the potential for inflationary pressures.
Gold's Recent Performance: Gold has shown strong performance, with a 38% increase this year, while silver has risen by 45%, reflecting growing investor interest in precious metals.
Investment Strategy: The podcast suggests a diversified approach to investing in precious metals, including physical ownership, ETFs, and mining stocks, while cautioning against over-reliance on paper claims.
Global and Historical Significance: Gold and silver are highlighted as globally recognized assets with historical significance, often used as a hedge against economic instability.
Risks and Opportunities: Potential risks include liquidity crises where gold might be sold off, while opportunities lie in the strategic allocation of precious metals as a hedge against systemic financial risks.
Future Outlook: The discussion suggests that while gold and silver have seen significant gains, investors should be cautious and consider long-term strategic allocations rather than chasing current momentum.
Transcript
A dollar today isn't a dollar tomorrow because the dollar's lost 99% of its purchasing power since 1971 versus gold. In a world where governments are actively devaluing money, preserving your purchasing power actually should be the top of your list. [Music] Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. Hello and welcome to Wealthon. I'm Maggie Lake. Joining us today to talk about precious metals and the role they should play in your portfolio is Brett Rentmester, founder and managing director at Windrock Wealth Management. Hey Brett, it's great to have you on again. Nice to see you Maggie. So I know a lot of folks listening have plugged back in. We all have plugged back in after summer and are taking a fresh look at our investment plans. Just a reminder, if you'd like a free uh review from the team at Windrock, just click the link below or head over to wealthyondon.comfree. Now, Brett, there has been so much discussion about gold these days. I feel like so much stuff I'm getting in my inbox is related to this, probably because we see gold sitting at or near record highs, but we all hear a lot of people talking about it as um its importance as a store of value. What does that mean? And why is everyone suddenly so concerned with that? Yeah. Well, I I would start by saying that, you know, um really when you earn money, you want to know that that money that you're saving is going to buy what you think it is in the future, right? Store of value. Even if it doesn't go up, you'd like to know that your $1,000 is going to buy, you know, some of the goods you want in the future that cost $1,000 today. And, you know, really, Maggie, for for much of history, money worked that way. Uh for a lot of modern history, the world was on what we call a gold or silver standard type system of some sort where paper money that we exchange was backed by actually physical gold and silver that were in somewhat limited supply. And so you had long periods of modern history where um you had a store of value where you know if uh if you died with $1,000 and left it to a granddaughter in a in a hundred years she'd be able to buy the same basket of goods you were. And that that that honest money system and that's kind of what the world operated like in many periods of time and prosperous times. But we're not in that world today. We're in a very different world that we're going to dig into today. But I think that's why the concern's there because the dollar is not a store of value, you know, and and we'll talk about it, but um you know, it's lost tremendous value even in the last number of years relative to things barometers like gold. And so I think there's kind of a panicked feeling amongst a lot of people that I'm working so hard to earn this money and then I wake up and three years later it it doesn't go very far or even six months later, you know, come up with your time period. Yeah. So, so it makes sense that this is connected to to concerns around the dollar, but I know sometimes people hear that and think, well, all right, yeah, if I'm traveling, I don't feel like my money goes as far, but I don't invest in currency mark markets. I'm not really in the dollar. Like, does that really impact me? Is that something I have to worry about? But it does, doesn't it? Yeah, absolutely. I mean, I think the broad-based increase in prices we're seeing are a direct reflection of, you know, printed money and um, you know, it's why your grandparents bought a house for $5,000 and your parents did for, you know, 50,000 and now a starter homes 500. It doesn't just happen. It's it's because we keep printing and manufacturing more supply of paper money. Now taken to an extreme there's some really bad instances in history we can look back to where this occurred and we we can go way back we can go to the Roman days where you know for a long time they had stability and money they their main coin was something called the silver daenerius was named that way because it was silver and over the course of many emperors the silver daenerius ended up with no silver in it to a point where it kind of went defunct you know more recently modern history last hundred years. We have of course horrific images of Wymer Germany after World War I and people you know pushing wheelbarls full of of money to try to buy a loaf of bread. And then we even have more recent instances. Um South America has some but Zimbabwe uh in 1980 the Zimbabwe dollar was worth about what the US dollar is or slightly more believe it or not. And they went all the way from that to I have have one here printing a piece of paper that says hundred trillion dollars on it if you can imagine that. Right? And of essentially it was worthless. It is worthless. But uh the point is it's insanity. And um you know a lot of people aren't taught this in school. We're not really taught about the history of money and certainly not about the benefits of sound money and why it makes sense to have something sitting behind the curtain that is somewhat limited in supply that anchors the system as opposed to a system where you just print, you know, endless supplies of money whenever you want it to a point where the money is not worth anything. Yeah. I mean, I think we can all imagine if we had our own printing press and could print our own money, we could buy as much as we want. We think, right? You know that the Zimbabwe example is interesting though because a lot of people push back and say like okay that's Zimbabwe though that it's an emerging market they have a lot of geopolitical all these other risks and corruption and you know a myriad of things but we're talking about the United States of America right I mean this is like the reserve currency of the world are are we concerned that we are starting to go down that path well I'm not I'm not here to suggest um hyperinflationary outcome however what what I would observe curve based on history is that when countries start abusing the printing of money and get to a point where all prices are propped up artificially and you can only pay interest by printing more money that's the pattern all of these you know dire situations went through and so people will say yeah but that could never happen here but the reality is again we're not taught this in school at least I never was it did happen here revolutionary war we had a currency called the continental and there's still an old saying you might hear from time if I'm not worth a continental and it's because there was a currency that that hyperinflated. After the true founding of our country, we were generally on a goldbacked kind of system until the Great Depression. We went off of it. Uh you might recall there was a decree to uh actually confiscate gold. And then out of World War II, there was a new agreement called Breton Woods that kind of acknowledged that the US was the winner and would set the rules. And it was it was a uh kind of a de facto gold standard where the US dollar would be the reserve currency of the world. But don't worry, the US would keep you know gold in reserves and you or I couldn't really exchange our dollars for gold but foreign governments could. Um and that led up to uh an interesting moment in the early 70s. As part of our gold interview series this month, Trey Reich will be hosting a gold investing webinar on Wednesday, September 17th. Send your questions for Trey about gold or gold miners to info@wealthon.com. And Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. This is the uh the the whole uh Nixon making a move to So why why why is that so top of mind for you right now? Well, it's I think it's a the pinnacle event that changed the course of backing dollars with gold. What what really happened in that era is led by the French uh people started redeeming dollars for gold. other governments because we were running social programs, we were spending money in the Vietnam War, all these things. So, they said, "Hey, I'd rather gold than dollars." And there was essentially a a silent run on the dollar. And Nixon said, "Hey, we're temporarily suspending that, but don't worry, your dollar value will be fine. A dollar today is a dollar tomorrow." Kind of like you were saying earlier. Well, a dollar today isn't a dollar tomorrow because the dollar's lost 99% of its purchasing power since 1971 versus gold from that moment. And it really opened up the era we're in now. It took a long time, which is basically how I describe it as like a a blank checkbook with no restraints on it. And it seems very easy. You just keep writing yourself checks. Like you said, if we could all write ourselves checks, just keep writing checks. I want to buy this. Oh, yeah. They need that. and you just keep plugging the holes. But then one day you open your eyes and it's tremendous, you know, debt out there. And and that's really the predicament not just the US is in, but look at Japan and look at Western Europe. Look at even China. This is a global phenomena of just perilous management and believing that, you know, the the gravy train would never end. And yet here we sit at in more of a precarious position. Yeah. A and also part of that right culturally and also the fact that we have demographics fighting against that a lot of older people exiting the workforce who need taken care of and not as many people funding that and those decisions have the reckoning from that has not really been made and and it's tough to be fair it's tough but so okay so that's why we're we're really focused on on this issue of gold right now because we we've sort have hints in history of what happens and it seems like we're on the cusp of another time when you know we're going to have to reckon with this and we are seeing a lot of predictions about the dollar moving lower. We've seen it seen a big move even in the past year. So talk to me a little bit about gold's performance because this you know historically we'll have people say yes this is a tough spot but there are people who just are not interested in gold. It doesn't yield anything. They think it's just sort of a, you know, a dead place to leave your money for lack of a better way of explaining it. How has how have metals been performing? What do we need to understand about this? Yeah. Well, before I answer how they've performed, let let me just acknowledge some of those criticisms are correct. I mean, gold in particular generally sustains purchasing power, which can seem very boring. Sustain purchase. I want to grow my money, right? It's it's that mindset. But in a world where governments are actively devaluing money, preserving your purchasing power is actually should be the top of your list, you know. And so you have a year like this, I mean, gold's been fantastic up uh as of yesterday about 38% the best annual performance since 1979. And what was going on in the late 70s? Uh trust was being lost, inflation was rising, rates were high, silver this year even better, 45%. and gold mining stocks based on an index basket almost 100% 98% as of yesterday. So, uh the world's clearly woken up to this concern and we've been longtime gold and silver uh owners. So, you know, it's nice to see patients rewarded, but yes, the reality is I think everybody now is looking at trillion dollar and interest payments and even with, you know, the the the bill passed this summer and Doge and all these efforts still spending well beyond what we take in as a country and a growing level of concern about where does that end? How do you get out of that predicament? And so we see smarter money saying, "Yeah, I should have some of my money, not bet the farm, but some of it should be in something that is going to preserve my purchasing power, whether the dollar survives another hundred years or the system changes, it's a uh it's a valuable chip, you know, to have." Yeah. And it really speaks to diversification, right? I mean, we we hear that all the time. We're all given these sort of wheels to try to diversify. if we're thinking about retirement, if you're in a a companyrun 401. Uh but it it seems that so much of that for so many years is was bonds or stocks. Like if you were looking for capital preservation, you were maybe pushing into bonds or some sort of you know balanced portfolio. I I at least never really saw this big presence of gold in the discussion. Yeah. And in some ways it goes beyond gold. I mean it certainly includes silver. Those are the two kind of monetary metals, but it's it's a bigger concept of paper assets moving to hard assets. Paper assets being bonds and maybe even some equities, things that can be printed out of thin air to some degree versus hard assets, tangible things that have a limited supply. Um, could be energy, could be farmland, could be rental real estate, a lot of things. But gold and silver are historically monetary metals and they have you know even though they haven't been as prominent in modern history you know they have a significance such that all over the globe someone will pay you money or recognize the value of a gold or a silver coin and in almost every culture somewhere along the way gold and silver were used as money or to back money. So it truly is a global asset that has unique qualities. One of which is uh it's nobody's promise to pay you. You know, if I buy a bond from the US government, am I concerned about getting the money back right now? No. Um but it is a promise to pay and it's it's a promise to pay in whatever the value of the currency is worth in the future. So again, um I think a lot of people are looking at this saying unless we see a better trajectory, why wouldn't I have some of my money in something that's going to preserve purchasing power and be a true hedge, you know, against uh something going bad? In fact, Megan, we put kind of a framework together of why own precious metals and um you know, in the middle are these kind of moderate scenarios. You own gold to preserve purchasing power. It seems a little boring, but over time it works. You also own it I think today in these moderate scenarios meaning not the extremes are because there are a lot of paper contracts where people think they own gold or silver but they don't. It's just a paper claim and a lot of these fund companies if things really ran up could say oh we just cash out Maggie here's your whatever cash and you say well I wanted to be in the metal and you have to scramble to get back in. Those are, you know, that's part of the reason you see based on different numbers 100 to one type paper for every physical ounce of gold or silver and and you can come up with with different, you know, ranging numbers. Those are the base scenarios, but there's also some more extreme scenarios we could discuss. So if I'm understanding you correctly when you're saying that does that mean that being in something so we've established why it's a good idea to have some exposure to precious metals you know historically and then and then in the current situation based on what we face am I hearing you correctly say that maybe ETFs aren't the place because it's not the actual physical gold you actually prefer being in the physical gold we do we do. Um, now you know 10 years ago that was a proposition for only very wealthy families and institutions, but the world has changed and there are are vehicles now to allow you to buy physical gold and silver, could be bars, could be coins and to store it in a non-bank vault. And a non-bank vault is a key consideration. Now, you could take delivery of it too, but that has its own risk. But you can hold it in a Brinks equivalent type vault um where people store a lot of valuable things, artwork and other things, have it sitting there and know that you have a direct claim on the physical metal. Now there are some funds that we'll also use, but I think investors have to be careful about which funds actually have the backing of the metal versus our kind of paper claims on the price movement. Uh but all else equal, yes, I think your baseline is you want to own it physically if you can. That's so interesting because I feel like a lot of people who have been attracted to the gold story this year, who jumped on the momentum because as we said, we've we've seen uh outperformance and it really perking up uh across metals really as well, but really gold um are playing it through the ETF because that's what we're all so used to. That's right. That's right. And it's easy. And listen, in the base scenarios, the moderate scenarios I'm describing, those vehicles will probably do fine. When will they not do fine? Potentially if you have more of the extreme scenarios and that's the other side to gold and silver. I mean they're really built for the extremes. So on one extreme is a world of hyperinflation like we were describing Zimbabwemer Germany. These terrible historical lessons that if you just keep printing money at some point it will have no value and people will get out of it as quickly as they can. And in those kind of scenarios, uh, you know, a single gold queen has gotten people out of countries. You know, it's it's pretty powerful, right? So that's one extreme. The other extreme would be the opposite. Kind of like a global collapse. Banks go under, you know, nobody can repay debts. And again, in that kind of world, I think gold and silver, particularly gold, has a very strong bid because hopefully you own it out of the banking system. It's an asset without an associated liability. It's nobody's promise to pay, right? That kind of world is where all the promises to pay break down. And so a lot of times we position gold and silver as you're owning them for these moderate scenarios, but you're resting assured that if we see one extreme or the other in the world, this is going to be one of the best, if not the best asset to own. Yeah. And I I I appreciate you making the point about being global, too. It's sort of borderless in a way. um and one one of the few sort of universally uh recognized. So um what about equities? Is there an equity play on this? Outside the ETF, every time we talk about gold, I get a lot of people asking me, well, what about the miners? Yeah. Yeah. We um you know, when we construct portfolios, we have kind of three categories of how we own metals. The first and the most important, I believe, is you own it physically in a non-bank vault. physical gold and silver, maybe coins, maybe something you want to take possession of someday if you get really concerned and you don't even want it in the vault. But that's one piece of the equation. Second piece is maybe the more practical, hey, you've got a brokerage account. What can you just buy today that owns gold and silver? Um, and that's where you have to really read the fine print and and invest in the funds that you believe have the best backing. So, that is a portion of it that's easier in IAS and retirement plans. And then the third component is you know there are companies out there that their business is mining gold and silver out of the ground. And in those cases you know these are public companies they behave somewhat like the stock market but they can disconnect in times like this. That's why you know with gold up 38% on the year. Some of these mining indexes are up 98% because now they're a leveraged play on the metal. They already have the physical physical metal in the ground. um their costs aren't going up astronomically and all of a sudden the price of what they're taking out of the ground is up substantially. So you see that you know in their margins and their profitability and then that brings kind of the herd of Wall Street analysts to check it out. And you know, one thing we talk about a lot is gold versus silver because when you bring the metal out of the ground, you actually get a lot of different estimates, but I'll rely on one expert, Bill Holter, that says you get about 10 ounces of silver for every 1 ounce of gold out of the ground when they mine it. And yet, when you look at what uh gold and silver trade at for pricing, they trade at about 88 to one. In other words, 88 ounces of silver only buys you 1 ounce of gold. And and you get that by saying, well, gold's around 3,600, silver's $41. Divide 41 into 3600. So you can make an argument even for the miners that silver is undervalued relative certainly to how the proportion it comes out of the ground at, but even relative to prior uh cycles. I mean, we're at we're not at an extreme. We were probably at an extreme a year ago, even a higher ratio. But if you went back to the last time we had a relative peak in around 2011, that ratio was maybe um in the 30s, 30ome times. And so if you applied that today, uh without any price movement other than that, you would have silver over $100 today just based on kind of a normalized relationship. Now, we don't know where that relationship's going to go, but all else equal, we like to play historical es and flows coming back to to kind of some normalized averages. So, where do you where do you think this sector moves from here? A and um just circling back to the beginning of our conversation that the role of this is really preservation. Um, I think some people are going to see these record highs and and jump on it as yet another momentum play along with, you know, um, big cap tech or the AI or crypto. They're going to see these big moves and say, I got to get in it. Um, but you clearly laid out what the role should be. What do you see happening from here? These were really big moves for the metals. You think this can continue? What What are you expecting? Yeah, I mean, you know, it's always hard to discuss it at a point like this when it's run up a lot. You and I did an AI discussion a couple weeks ago and it's a very similar discussion. It's AI's here to stay, but be careful chasing things that have been winners. You might you might get burned, you know, playing the timing wrong. And I think that for gold and silver, it's it's a similar message. I think, you know, these three buckets to fill. I would still look at filling the physical metal bucket because that is a hedge against things. And quite honestly, we're still in a world with debt that can't be sustained without printing money. As long as that's the case, it tells me governments are going to continue to print. And as long as there's money printed, prices will continue to reflect that in the gold and silver markets. Now, has it gone too far too fast? Perhaps, you know, it wouldn't be shocking at some point to see a draw down or six months of sideways action, but we could also see, you know, relatively big moves first. I think right now, nobody's talking about hyperinflation or collapse of systems or those kind of things, right? So, um, you know, what is the fair value of gold and silver in this kind of world? you know, this kind of range in in in something, you know, not price forecast, but seems reasonable to say, you know, 3,600 to 4,500 on gold and, you know, $35, which is lower than silver is to maybe $50. That's kind of like a reasonable range. However, if there's cracks in the system or you start seeing more concerning things and people start rushing into gold, then you're bringing a lot of money in that doesn't exist in the space today. Most investors have zero, you know, waiting for this category. Many institutions have a zero waiting. So, you know, you can have a lot of things happen at once where concerns elevate, money moves in because there aren't allocations, and maybe some of these paper contracts that think they own gold and silver realize they don't, and they come in as well. So, that could certainly push things much higher. But, don't think gold and silver don't have risk. I mean, they they can go down just like the stock market and and the mining companies can as well. So, we like it. We're not getting quote getting out of it, but we're also cautious getting in at these levels or at least we wade into it and do it methodically instead of, you know, just chasing um what's been a great run here. Yeah. So, what what would be the risks that might dictate performance moving forward? You said that, you know, they can be moved both ways, of course. Yeah. What are some of the things that you're watching for? Yeah. I mean, well, you've had markets like I believe 08 was an example where stock markets down and gold's down. Even though you'd think gold should be hold up during a period like that. Sometimes when there's a liquidity crisis and everybody's looking for money, they will take it from the area that hasn't fallen. You know, the winner, they'll say, "I need this money. Everything else is down. I'll I'll take it on my gold." Right? So, you never know when volatility is going to strike or if we're going to be in a period potentially where the two disconnect and gold and silver go in their own direction. Um, the other scenario would be, you know, the I guess the real question is, is there a path ahead where we can get back to some monetary stability and the debts don't keep exploding and we find buyers for our treasuries? I mean, right now we have a lot of supply of treasury coming online and we've been reliant historically on countries like China and Japan and others buying. They're all pulling back. So, who's going to buy it short of ourselves just printing money with the right hand to in the left hand buy our own bonds? And I think one of the avenues that they've talked about and I think is a strategic plan is to allow uh this is crypto idea but allow more companies to issue issue money essentially issue a stable coin some kind of token that has to be backed or is likely to be backed in large part by US treasuries creating this new demand driver for US treasuries. Because even though we're pointing in on the dollar here, the reality is most people globally would rather own the dollar than their local currency. Right? As many problems as the dollar has, a lot of these other currencies have similar or worse problems. So I think the thought process is well maybe you can you maybe you can allow tech companies companies globally to issue their own tokens to customers almost like everybody could become a bank and then the demand for treasuries gets gobbled up and maybe alongside that you get the trajectory of our debt problem on a little better course and m maybe you don't solve the problem but you buy you know time in a scenario like that where it works maybe gold and silver sell you know, maybe concern levels come down. Um, I'd like to see it work first or at least see signs it's going to work because, you know, I think we're at a a real inflection point. And, you know, we've talked about this too, there's a book and a theory, the fourth turning, that every about a hundred years, and this would be the time period, things change massively and there's a reset or a rethinking of the systems and how they work going forward. And I think currency is at front and center, you know, in this moment. So we might even be going through a currency adjustment that we're not even aware of that you know five years from now we'll look back and just like the Nixon thing in 1971 people didn't see it then you understand it now and what it led to so we might be in a moment where when we look back we'll see the change was already happening under our feet we just didn't put all the pieces together so again I think that all argues for a strategic allocation to precious metals but acknowledge that these things are up a lot this year and you know you don't need to get a full allocation immediately. Yeah, absolutely. This is where sizing really matters when we're talking about diversification and also being patient, right? Because there may be an opportunity. Um but you still want to have a plan and be waiting for those price levels that you really want. Uh Brett, what a timely conversation and I think it's a really good opportunity to sort of dig in a little bit beneath just the headline that gold's on a record, silver's on track and really understand some of the larger dynamics that are going on. So, so appreciate it. Thank you so much. Great seeing you. Thank you. And just a reminder to everybody, if you would like to get a free portfolio review from the Windrock team and check your allocations and what you might want to change, click the link in the description or just head over to wealthy.comfree. Thanks for joining us. We'll see you next time. [Music]
The Dollar’s 99% Collapse vs Gold | Brett Rentmeester
Summary
Transcript
A dollar today isn't a dollar tomorrow because the dollar's lost 99% of its purchasing power since 1971 versus gold. In a world where governments are actively devaluing money, preserving your purchasing power actually should be the top of your list. [Music] Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. Hello and welcome to Wealthon. I'm Maggie Lake. Joining us today to talk about precious metals and the role they should play in your portfolio is Brett Rentmester, founder and managing director at Windrock Wealth Management. Hey Brett, it's great to have you on again. Nice to see you Maggie. So I know a lot of folks listening have plugged back in. We all have plugged back in after summer and are taking a fresh look at our investment plans. Just a reminder, if you'd like a free uh review from the team at Windrock, just click the link below or head over to wealthyondon.comfree. Now, Brett, there has been so much discussion about gold these days. I feel like so much stuff I'm getting in my inbox is related to this, probably because we see gold sitting at or near record highs, but we all hear a lot of people talking about it as um its importance as a store of value. What does that mean? And why is everyone suddenly so concerned with that? Yeah. Well, I I would start by saying that, you know, um really when you earn money, you want to know that that money that you're saving is going to buy what you think it is in the future, right? Store of value. Even if it doesn't go up, you'd like to know that your $1,000 is going to buy, you know, some of the goods you want in the future that cost $1,000 today. And, you know, really, Maggie, for for much of history, money worked that way. Uh for a lot of modern history, the world was on what we call a gold or silver standard type system of some sort where paper money that we exchange was backed by actually physical gold and silver that were in somewhat limited supply. And so you had long periods of modern history where um you had a store of value where you know if uh if you died with $1,000 and left it to a granddaughter in a in a hundred years she'd be able to buy the same basket of goods you were. And that that that honest money system and that's kind of what the world operated like in many periods of time and prosperous times. But we're not in that world today. We're in a very different world that we're going to dig into today. But I think that's why the concern's there because the dollar is not a store of value, you know, and and we'll talk about it, but um you know, it's lost tremendous value even in the last number of years relative to things barometers like gold. And so I think there's kind of a panicked feeling amongst a lot of people that I'm working so hard to earn this money and then I wake up and three years later it it doesn't go very far or even six months later, you know, come up with your time period. Yeah. So, so it makes sense that this is connected to to concerns around the dollar, but I know sometimes people hear that and think, well, all right, yeah, if I'm traveling, I don't feel like my money goes as far, but I don't invest in currency mark markets. I'm not really in the dollar. Like, does that really impact me? Is that something I have to worry about? But it does, doesn't it? Yeah, absolutely. I mean, I think the broad-based increase in prices we're seeing are a direct reflection of, you know, printed money and um, you know, it's why your grandparents bought a house for $5,000 and your parents did for, you know, 50,000 and now a starter homes 500. It doesn't just happen. It's it's because we keep printing and manufacturing more supply of paper money. Now taken to an extreme there's some really bad instances in history we can look back to where this occurred and we we can go way back we can go to the Roman days where you know for a long time they had stability and money they their main coin was something called the silver daenerius was named that way because it was silver and over the course of many emperors the silver daenerius ended up with no silver in it to a point where it kind of went defunct you know more recently modern history last hundred years. We have of course horrific images of Wymer Germany after World War I and people you know pushing wheelbarls full of of money to try to buy a loaf of bread. And then we even have more recent instances. Um South America has some but Zimbabwe uh in 1980 the Zimbabwe dollar was worth about what the US dollar is or slightly more believe it or not. And they went all the way from that to I have have one here printing a piece of paper that says hundred trillion dollars on it if you can imagine that. Right? And of essentially it was worthless. It is worthless. But uh the point is it's insanity. And um you know a lot of people aren't taught this in school. We're not really taught about the history of money and certainly not about the benefits of sound money and why it makes sense to have something sitting behind the curtain that is somewhat limited in supply that anchors the system as opposed to a system where you just print, you know, endless supplies of money whenever you want it to a point where the money is not worth anything. Yeah. I mean, I think we can all imagine if we had our own printing press and could print our own money, we could buy as much as we want. We think, right? You know that the Zimbabwe example is interesting though because a lot of people push back and say like okay that's Zimbabwe though that it's an emerging market they have a lot of geopolitical all these other risks and corruption and you know a myriad of things but we're talking about the United States of America right I mean this is like the reserve currency of the world are are we concerned that we are starting to go down that path well I'm not I'm not here to suggest um hyperinflationary outcome however what what I would observe curve based on history is that when countries start abusing the printing of money and get to a point where all prices are propped up artificially and you can only pay interest by printing more money that's the pattern all of these you know dire situations went through and so people will say yeah but that could never happen here but the reality is again we're not taught this in school at least I never was it did happen here revolutionary war we had a currency called the continental and there's still an old saying you might hear from time if I'm not worth a continental and it's because there was a currency that that hyperinflated. After the true founding of our country, we were generally on a goldbacked kind of system until the Great Depression. We went off of it. Uh you might recall there was a decree to uh actually confiscate gold. And then out of World War II, there was a new agreement called Breton Woods that kind of acknowledged that the US was the winner and would set the rules. And it was it was a uh kind of a de facto gold standard where the US dollar would be the reserve currency of the world. But don't worry, the US would keep you know gold in reserves and you or I couldn't really exchange our dollars for gold but foreign governments could. Um and that led up to uh an interesting moment in the early 70s. As part of our gold interview series this month, Trey Reich will be hosting a gold investing webinar on Wednesday, September 17th. Send your questions for Trey about gold or gold miners to info@wealthon.com. And Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. This is the uh the the whole uh Nixon making a move to So why why why is that so top of mind for you right now? Well, it's I think it's a the pinnacle event that changed the course of backing dollars with gold. What what really happened in that era is led by the French uh people started redeeming dollars for gold. other governments because we were running social programs, we were spending money in the Vietnam War, all these things. So, they said, "Hey, I'd rather gold than dollars." And there was essentially a a silent run on the dollar. And Nixon said, "Hey, we're temporarily suspending that, but don't worry, your dollar value will be fine. A dollar today is a dollar tomorrow." Kind of like you were saying earlier. Well, a dollar today isn't a dollar tomorrow because the dollar's lost 99% of its purchasing power since 1971 versus gold from that moment. And it really opened up the era we're in now. It took a long time, which is basically how I describe it as like a a blank checkbook with no restraints on it. And it seems very easy. You just keep writing yourself checks. Like you said, if we could all write ourselves checks, just keep writing checks. I want to buy this. Oh, yeah. They need that. and you just keep plugging the holes. But then one day you open your eyes and it's tremendous, you know, debt out there. And and that's really the predicament not just the US is in, but look at Japan and look at Western Europe. Look at even China. This is a global phenomena of just perilous management and believing that, you know, the the gravy train would never end. And yet here we sit at in more of a precarious position. Yeah. A and also part of that right culturally and also the fact that we have demographics fighting against that a lot of older people exiting the workforce who need taken care of and not as many people funding that and those decisions have the reckoning from that has not really been made and and it's tough to be fair it's tough but so okay so that's why we're we're really focused on on this issue of gold right now because we we've sort have hints in history of what happens and it seems like we're on the cusp of another time when you know we're going to have to reckon with this and we are seeing a lot of predictions about the dollar moving lower. We've seen it seen a big move even in the past year. So talk to me a little bit about gold's performance because this you know historically we'll have people say yes this is a tough spot but there are people who just are not interested in gold. It doesn't yield anything. They think it's just sort of a, you know, a dead place to leave your money for lack of a better way of explaining it. How has how have metals been performing? What do we need to understand about this? Yeah. Well, before I answer how they've performed, let let me just acknowledge some of those criticisms are correct. I mean, gold in particular generally sustains purchasing power, which can seem very boring. Sustain purchase. I want to grow my money, right? It's it's that mindset. But in a world where governments are actively devaluing money, preserving your purchasing power is actually should be the top of your list, you know. And so you have a year like this, I mean, gold's been fantastic up uh as of yesterday about 38% the best annual performance since 1979. And what was going on in the late 70s? Uh trust was being lost, inflation was rising, rates were high, silver this year even better, 45%. and gold mining stocks based on an index basket almost 100% 98% as of yesterday. So, uh the world's clearly woken up to this concern and we've been longtime gold and silver uh owners. So, you know, it's nice to see patients rewarded, but yes, the reality is I think everybody now is looking at trillion dollar and interest payments and even with, you know, the the the bill passed this summer and Doge and all these efforts still spending well beyond what we take in as a country and a growing level of concern about where does that end? How do you get out of that predicament? And so we see smarter money saying, "Yeah, I should have some of my money, not bet the farm, but some of it should be in something that is going to preserve my purchasing power, whether the dollar survives another hundred years or the system changes, it's a uh it's a valuable chip, you know, to have." Yeah. And it really speaks to diversification, right? I mean, we we hear that all the time. We're all given these sort of wheels to try to diversify. if we're thinking about retirement, if you're in a a companyrun 401. Uh but it it seems that so much of that for so many years is was bonds or stocks. Like if you were looking for capital preservation, you were maybe pushing into bonds or some sort of you know balanced portfolio. I I at least never really saw this big presence of gold in the discussion. Yeah. And in some ways it goes beyond gold. I mean it certainly includes silver. Those are the two kind of monetary metals, but it's it's a bigger concept of paper assets moving to hard assets. Paper assets being bonds and maybe even some equities, things that can be printed out of thin air to some degree versus hard assets, tangible things that have a limited supply. Um, could be energy, could be farmland, could be rental real estate, a lot of things. But gold and silver are historically monetary metals and they have you know even though they haven't been as prominent in modern history you know they have a significance such that all over the globe someone will pay you money or recognize the value of a gold or a silver coin and in almost every culture somewhere along the way gold and silver were used as money or to back money. So it truly is a global asset that has unique qualities. One of which is uh it's nobody's promise to pay you. You know, if I buy a bond from the US government, am I concerned about getting the money back right now? No. Um but it is a promise to pay and it's it's a promise to pay in whatever the value of the currency is worth in the future. So again, um I think a lot of people are looking at this saying unless we see a better trajectory, why wouldn't I have some of my money in something that's going to preserve purchasing power and be a true hedge, you know, against uh something going bad? In fact, Megan, we put kind of a framework together of why own precious metals and um you know, in the middle are these kind of moderate scenarios. You own gold to preserve purchasing power. It seems a little boring, but over time it works. You also own it I think today in these moderate scenarios meaning not the extremes are because there are a lot of paper contracts where people think they own gold or silver but they don't. It's just a paper claim and a lot of these fund companies if things really ran up could say oh we just cash out Maggie here's your whatever cash and you say well I wanted to be in the metal and you have to scramble to get back in. Those are, you know, that's part of the reason you see based on different numbers 100 to one type paper for every physical ounce of gold or silver and and you can come up with with different, you know, ranging numbers. Those are the base scenarios, but there's also some more extreme scenarios we could discuss. So if I'm understanding you correctly when you're saying that does that mean that being in something so we've established why it's a good idea to have some exposure to precious metals you know historically and then and then in the current situation based on what we face am I hearing you correctly say that maybe ETFs aren't the place because it's not the actual physical gold you actually prefer being in the physical gold we do we do. Um, now you know 10 years ago that was a proposition for only very wealthy families and institutions, but the world has changed and there are are vehicles now to allow you to buy physical gold and silver, could be bars, could be coins and to store it in a non-bank vault. And a non-bank vault is a key consideration. Now, you could take delivery of it too, but that has its own risk. But you can hold it in a Brinks equivalent type vault um where people store a lot of valuable things, artwork and other things, have it sitting there and know that you have a direct claim on the physical metal. Now there are some funds that we'll also use, but I think investors have to be careful about which funds actually have the backing of the metal versus our kind of paper claims on the price movement. Uh but all else equal, yes, I think your baseline is you want to own it physically if you can. That's so interesting because I feel like a lot of people who have been attracted to the gold story this year, who jumped on the momentum because as we said, we've we've seen uh outperformance and it really perking up uh across metals really as well, but really gold um are playing it through the ETF because that's what we're all so used to. That's right. That's right. And it's easy. And listen, in the base scenarios, the moderate scenarios I'm describing, those vehicles will probably do fine. When will they not do fine? Potentially if you have more of the extreme scenarios and that's the other side to gold and silver. I mean they're really built for the extremes. So on one extreme is a world of hyperinflation like we were describing Zimbabwemer Germany. These terrible historical lessons that if you just keep printing money at some point it will have no value and people will get out of it as quickly as they can. And in those kind of scenarios, uh, you know, a single gold queen has gotten people out of countries. You know, it's it's pretty powerful, right? So that's one extreme. The other extreme would be the opposite. Kind of like a global collapse. Banks go under, you know, nobody can repay debts. And again, in that kind of world, I think gold and silver, particularly gold, has a very strong bid because hopefully you own it out of the banking system. It's an asset without an associated liability. It's nobody's promise to pay, right? That kind of world is where all the promises to pay break down. And so a lot of times we position gold and silver as you're owning them for these moderate scenarios, but you're resting assured that if we see one extreme or the other in the world, this is going to be one of the best, if not the best asset to own. Yeah. And I I I appreciate you making the point about being global, too. It's sort of borderless in a way. um and one one of the few sort of universally uh recognized. So um what about equities? Is there an equity play on this? Outside the ETF, every time we talk about gold, I get a lot of people asking me, well, what about the miners? Yeah. Yeah. We um you know, when we construct portfolios, we have kind of three categories of how we own metals. The first and the most important, I believe, is you own it physically in a non-bank vault. physical gold and silver, maybe coins, maybe something you want to take possession of someday if you get really concerned and you don't even want it in the vault. But that's one piece of the equation. Second piece is maybe the more practical, hey, you've got a brokerage account. What can you just buy today that owns gold and silver? Um, and that's where you have to really read the fine print and and invest in the funds that you believe have the best backing. So, that is a portion of it that's easier in IAS and retirement plans. And then the third component is you know there are companies out there that their business is mining gold and silver out of the ground. And in those cases you know these are public companies they behave somewhat like the stock market but they can disconnect in times like this. That's why you know with gold up 38% on the year. Some of these mining indexes are up 98% because now they're a leveraged play on the metal. They already have the physical physical metal in the ground. um their costs aren't going up astronomically and all of a sudden the price of what they're taking out of the ground is up substantially. So you see that you know in their margins and their profitability and then that brings kind of the herd of Wall Street analysts to check it out. And you know, one thing we talk about a lot is gold versus silver because when you bring the metal out of the ground, you actually get a lot of different estimates, but I'll rely on one expert, Bill Holter, that says you get about 10 ounces of silver for every 1 ounce of gold out of the ground when they mine it. And yet, when you look at what uh gold and silver trade at for pricing, they trade at about 88 to one. In other words, 88 ounces of silver only buys you 1 ounce of gold. And and you get that by saying, well, gold's around 3,600, silver's $41. Divide 41 into 3600. So you can make an argument even for the miners that silver is undervalued relative certainly to how the proportion it comes out of the ground at, but even relative to prior uh cycles. I mean, we're at we're not at an extreme. We were probably at an extreme a year ago, even a higher ratio. But if you went back to the last time we had a relative peak in around 2011, that ratio was maybe um in the 30s, 30ome times. And so if you applied that today, uh without any price movement other than that, you would have silver over $100 today just based on kind of a normalized relationship. Now, we don't know where that relationship's going to go, but all else equal, we like to play historical es and flows coming back to to kind of some normalized averages. So, where do you where do you think this sector moves from here? A and um just circling back to the beginning of our conversation that the role of this is really preservation. Um, I think some people are going to see these record highs and and jump on it as yet another momentum play along with, you know, um, big cap tech or the AI or crypto. They're going to see these big moves and say, I got to get in it. Um, but you clearly laid out what the role should be. What do you see happening from here? These were really big moves for the metals. You think this can continue? What What are you expecting? Yeah, I mean, you know, it's always hard to discuss it at a point like this when it's run up a lot. You and I did an AI discussion a couple weeks ago and it's a very similar discussion. It's AI's here to stay, but be careful chasing things that have been winners. You might you might get burned, you know, playing the timing wrong. And I think that for gold and silver, it's it's a similar message. I think, you know, these three buckets to fill. I would still look at filling the physical metal bucket because that is a hedge against things. And quite honestly, we're still in a world with debt that can't be sustained without printing money. As long as that's the case, it tells me governments are going to continue to print. And as long as there's money printed, prices will continue to reflect that in the gold and silver markets. Now, has it gone too far too fast? Perhaps, you know, it wouldn't be shocking at some point to see a draw down or six months of sideways action, but we could also see, you know, relatively big moves first. I think right now, nobody's talking about hyperinflation or collapse of systems or those kind of things, right? So, um, you know, what is the fair value of gold and silver in this kind of world? you know, this kind of range in in in something, you know, not price forecast, but seems reasonable to say, you know, 3,600 to 4,500 on gold and, you know, $35, which is lower than silver is to maybe $50. That's kind of like a reasonable range. However, if there's cracks in the system or you start seeing more concerning things and people start rushing into gold, then you're bringing a lot of money in that doesn't exist in the space today. Most investors have zero, you know, waiting for this category. Many institutions have a zero waiting. So, you know, you can have a lot of things happen at once where concerns elevate, money moves in because there aren't allocations, and maybe some of these paper contracts that think they own gold and silver realize they don't, and they come in as well. So, that could certainly push things much higher. But, don't think gold and silver don't have risk. I mean, they they can go down just like the stock market and and the mining companies can as well. So, we like it. We're not getting quote getting out of it, but we're also cautious getting in at these levels or at least we wade into it and do it methodically instead of, you know, just chasing um what's been a great run here. Yeah. So, what what would be the risks that might dictate performance moving forward? You said that, you know, they can be moved both ways, of course. Yeah. What are some of the things that you're watching for? Yeah. I mean, well, you've had markets like I believe 08 was an example where stock markets down and gold's down. Even though you'd think gold should be hold up during a period like that. Sometimes when there's a liquidity crisis and everybody's looking for money, they will take it from the area that hasn't fallen. You know, the winner, they'll say, "I need this money. Everything else is down. I'll I'll take it on my gold." Right? So, you never know when volatility is going to strike or if we're going to be in a period potentially where the two disconnect and gold and silver go in their own direction. Um, the other scenario would be, you know, the I guess the real question is, is there a path ahead where we can get back to some monetary stability and the debts don't keep exploding and we find buyers for our treasuries? I mean, right now we have a lot of supply of treasury coming online and we've been reliant historically on countries like China and Japan and others buying. They're all pulling back. So, who's going to buy it short of ourselves just printing money with the right hand to in the left hand buy our own bonds? And I think one of the avenues that they've talked about and I think is a strategic plan is to allow uh this is crypto idea but allow more companies to issue issue money essentially issue a stable coin some kind of token that has to be backed or is likely to be backed in large part by US treasuries creating this new demand driver for US treasuries. Because even though we're pointing in on the dollar here, the reality is most people globally would rather own the dollar than their local currency. Right? As many problems as the dollar has, a lot of these other currencies have similar or worse problems. So I think the thought process is well maybe you can you maybe you can allow tech companies companies globally to issue their own tokens to customers almost like everybody could become a bank and then the demand for treasuries gets gobbled up and maybe alongside that you get the trajectory of our debt problem on a little better course and m maybe you don't solve the problem but you buy you know time in a scenario like that where it works maybe gold and silver sell you know, maybe concern levels come down. Um, I'd like to see it work first or at least see signs it's going to work because, you know, I think we're at a a real inflection point. And, you know, we've talked about this too, there's a book and a theory, the fourth turning, that every about a hundred years, and this would be the time period, things change massively and there's a reset or a rethinking of the systems and how they work going forward. And I think currency is at front and center, you know, in this moment. So we might even be going through a currency adjustment that we're not even aware of that you know five years from now we'll look back and just like the Nixon thing in 1971 people didn't see it then you understand it now and what it led to so we might be in a moment where when we look back we'll see the change was already happening under our feet we just didn't put all the pieces together so again I think that all argues for a strategic allocation to precious metals but acknowledge that these things are up a lot this year and you know you don't need to get a full allocation immediately. Yeah, absolutely. This is where sizing really matters when we're talking about diversification and also being patient, right? Because there may be an opportunity. Um but you still want to have a plan and be waiting for those price levels that you really want. Uh Brett, what a timely conversation and I think it's a really good opportunity to sort of dig in a little bit beneath just the headline that gold's on a record, silver's on track and really understand some of the larger dynamics that are going on. So, so appreciate it. Thank you so much. Great seeing you. Thank you. And just a reminder to everybody, if you would like to get a free portfolio review from the Windrock team and check your allocations and what you might want to change, click the link in the description or just head over to wealthy.comfree. Thanks for joining us. We'll see you next time. [Music]