The Case for Gold_ Why It Matters Now _ Philip Patrick

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Hello everybody, and thank you for tuning into the Liberty Report.

Today we have a special guest with us today, and he's a frequent guest because he's an economist

from our favorite gold company, Birch Gold.

His name is Philip Patrick, and he's been with us before.

And right now we will get into the business.

We have a title, even, for our program today, as usual.

And the title today, what we want to talk about, has the case for gold changed?

And it's a significant question.

That is the title of the minority reports that we did on the gold commission way back in 1981.

So the gold commission said, finished it up, but that was a minority report.

Because there were 17 of us on the commission, but two of us were actually believing gold.

So we made the case, but that was done in a, you know, a minority report.

It was called the case for gold.

But the question I'm asking now, and we're going to ask Philip this, has the case for gold changed?

Because, you know, some days you say, at least I experienced, I say, oh, I just heard this horrible thing happen.

Gold's going to go up $100. And it goes down, or something like that.

And there's anticipation. So my anticipation of me, especially immediate,

are not all that accurate and are not meant to be.

But right now we have, you know, lots of things going on.

And a lot of people are asking about the case for gold.

So Philip, what's your opinion for this on this case for gold?

Do you think it's changed at all, or do you think it's fading?

Or do you think it's getting more important?

I mean, I certainly think it's getting more important.

And we're seeing that in its meteoric rise.

But I think it's a very good question that you ask.

Historically, I would say gold rises for very predictable reasons.

Usually it's in response to something clearly wrong with the financial system.

High inflation, currency crisis, geopolitical instability, or banking panic.

And that makes sense, right? You move to a safe haven asset,

because historically, gold functions are as a hedge against instability in the monetary system.

But today, although we have instability, a lot of the top line numbers are looking good, right?

GDP numbers were strong, inflation's getting tamed.

Yet we're still seeing gold move aggressively.

So I would say that the case for gold has certainly strengthened.

But the drivers, perhaps, are a little bit different.

Gold's going up with the markets against the markets regardless.

So certainly, we're seeing some trends that we used to be able to rely on being backed in the current climate.

You know, the long time history of gold is fascinating,

because I think they were very much aware that gold was something different, even up to thousands.

Some people even say 6,000 years ago they had an inkling that gold was a very special substance.

And then later on, a few thousand years after that, you know, it was used as money.

And it changed over that period of time.

But it was almost like a natural thing.

It wasn't like somebody sat down with a computer invented it all.

It wasn't there. It seems like it was given to us in a natural way.

And people, you know, grasp that rather quickly.

And it's been around. It has its ups and downs.

It's been sought after by many, many people for various reasons.

But basically, most people think of gold as money, except Bernanke.

When I asked him if gold was money, he's one person.

No, that's not money. He looked a little bit nervous about it.

But that doesn't matter what one individual thinks,

because I think the market decides what's going to happen.

There are some days that people don't even think a whole lot, even in our own history.

You know, from 1933 up to the time we re-legalized gold,

they took gold away from the American people to even own.

You know, it was a big deal, but it was something that was rather calm.

People didn't know that it would be back in bulk.

They bought gold shares.

But we were a lot of our own gold.

But one thing that is that they always recognize gold,

even no matter what they say, and all of a sudden it burst through.

It burst through.

And that's what we're experiencing now.

So little things have to play a big role in it.

And I think it really invites an understanding of how prices are set.

And how do you put value on thing?

There are actually two ways they've done it over the centuries.

One is the labor theory of value.

As you put in labor, it's worth something.

You work hard, you build a house, and labor has a significant factor to it.

But labor, you know, Adam Smith and Carl Marx agreed on that.

That it was labor that decided how much something was worth.

Well, that didn't work.

The Austrian's canceled that on.

And it isn't that because there's a subjectivity to it.

And that's why this is very interesting to talk about,

because there's no rule.

I don't think AI of all of a sudden is going to be available to us,

Philip, and say, OK, the fun is gone.

AI is going to tell us in 30 days gold is going to be up 10% or down 12%.

That's not it.

Because of the subjectivity of people, why do they do it?

Why do they suddenly not want the gold or don't use the gold?

And why do these prices work?

It depends on what the people think.

So it's on labor, just because put a lot of labor into it.

If you build a junky house, that doesn't mean you spend a lot of hours.

It doesn't happen.

But the subject of theory of value, it sounds like it's a weak explanation.

But that means that there's a marketplace out there.

The market of thousands, millions, billions of people over years and years

make the decision on whether they want a whole gold or not.

So that's what I think is fascinating about it.

And yet it's so important.

It's probably the most important commodity throughout all this history.

And that is why, you know, when times get bad and people say,

wake up and say, hey, maybe we ought to talk about gold.

Well, I think, Philip, but I think you probably agree that we are in that period of time

where a lot more people are looking at the issue of gold.

There is no question about it.

And I think over the last 10 years, Bernacchi has been proven wrong, right?

One thing that is clear today is gold is money.

I was, you know, I had the same concerns.

If you'd asked me at the turn of the century about gold,

you know, where I was in my career,

I was starting to feel like it had become a relic

and the world had transitioned beyond it.

But what we've seen over the last decade has proven,

decade, 15 years, really since the turn of the century,

has proven that that is not the case at all.

And gold ultimately is money.

And in a climate when, you know,

United States is printing money hand over fist deficits are expanding.

Dead is an unmanageable level.

The world is reverting back to what was always the standard for international currency.

I think broadly, a belief was born in the 80s, right?

The world had transitioned, right?

This post-World War II, US-led order,

meant the world now broadly trusted each other.

And we replaced what was the standard for international currency gold,

with debt and specifically US government debt.

And I think that illusion has clearly been shattered.

I think broadly, the trust has been broken.

There's been asset seizures and sanctions,

which have eroded trust internationally.

And I think more importantly than that,

debt is an investment simply isn't viable anymore.

Debt to GDP in the United States is at 124%.

Today, it's not just a US problem.

The entire West averages 110% debt to GDP.

So I think the illusion has been shattered,

and the world is slowly reverting back to sound money.

Gold became last year the number two global reserve asset.

It overtook the euro.

But even with all that gold buying,

it only constitutes 20% of global reserve.

Go back to the 1980s, gold was about 70%.

So I think we're going to see a reversion back to that.

And like I said in the process,

I think Bernacchi has certainly been proven wrong.

One thing I will say about the current climate is

what we're seeing is strange.

Gold is performing incredibly well.

It was 300% in the last number of years,

really since the pandemic.

And it's done that without a single defining crisis.

It was 27% in 24.

It grew 65% gold last year.

Even this year we're in beginning mid-March.

It's up 19% year today.

And this has happened despite one of the most aggressive

interest rate hiking cycles in modern history,

which usually will push prices down.

So we're seeing something I think unusual,

which is financial markets appear strong on the surface,

that gold keeps climbing quietly in the background.

And I think these are the differences today.

Gold's going out regardless.

You know, I think what you've been talking about,

I think you put a label on it,

you refer to the great repricing.

And it seems that that's going on right now.

But what do you think is going to happen?

Is there a point where it might come down,

even in a time when we were following good monetary rules,

there was not as much chaos and changes.

And I'm amazed at how tolerant the American people were,

when they weren't even a lot of own gold.

So do you think that we're going to get to that point,

where at least there will be a pause,

or could this be something leading to something

that we have not experienced before?

Because gold has been through a lot over the centuries.

And I think that no matter what the government say

in the central bank say,

I think ultimately what you're talking about

is really controlled by the people themselves,

because you can't make people use money

unless the government threatens them.

If they do, they might get into trouble.

So is this the thing that you anticipate

that will last a long time,

or what do you think could happen that would be very favorable?

Listen, it's all going to be dependent.

And I think you know this better than me and better than most.

It's all going to be dependent on whether we can get our fiscal house

in order and curb spending.

I mean, that was the whole thing of this administration.

It was the Department of Government Efficiency.

It was curbing spending, generating revenue.

And they've done a good job in doing that.

We got $300 billion of tariff revenue

until it was struck down by the Supreme Court.

But it's just not enough,

because along with tariff revenue,

we were also had tax cuts

and we increased defense spending.

So an administration who was very much laser-focused

on closing the deficit,

expanded the deficit, right?

And if they can't get a handle on it,

I don't know who can.

The Democrats prior, and this isn't to get political,

but they didn't even discuss spending, right?

It was about spending more or not less.

So unless there's a political appetite

to really tackle the problem,

I don't see it going anyway.

I think it's just about managing the pace of decline.

And you talk about volatility.

That isn't helping either, right?

There's a ton of volatility.

It's Venezuela, it's Iran, it's tariff starting,

tariff stopping, it's pressure on the central bank.

This sort of volatility at the moment

is expediting the problem, right?

The Federal Reserve have lowered interest rates five times

in the last two years.

In a normal climate of demand for our debt,

borrowing rates should have gone down.

They've gone out.

That is a sign that the world thinks

we're not going to get our house in order

and they're commanding higher interest to hold the debt.

As long as that continues, I think the problem will escalate.

So to summarize my response,

unless we can get a handle on spending quickly

and I'm getting less and less hopeful,

it's just a case of managing the pace of decline.

Debt service,

so just the annual interest payments on the debt,

are the second biggest expense for the federal government.

They're $1.13 trillion.

But the problem is,

as we add two trillion a year to the debt

and as the world is commanding higher interest to carry the debt,

I mean debt service is like 23% of our revenue today.

It's projected at this pace.

It'll be 50% of revenue in a decade.

That's an unsolvable problem in the context of history.

So I believe in American exceptionalism.

I understand we have the most blessed geography on the planet.

So there's hope inside of me.

The numbers guide doesn't see a way out there.

In these many thousands of years,

and the goals have been around and recent thousand years,

it's been notorious that the governments always take over.

I think the market picked gold,

and the people picked gold,

and it was a substitute for barter,

and it made more sense.

But it seems like over these centuries

that governments always took control.

Excuse me.

But I think what they did was they debased the whole idea,

in principle, where the gold was a steady-end factor.

It was something you could define.

You could define it by a weight.

It could be a store of value.

But governments would be held in check

if they couldn't have the control.

So they inevitably take it over.

And the debt, one reason is that governments like to use debt.

They like to be politicians, especially in our day and age.

There are politicians that buy votes in order to stay in office.

And also to do that,

they run up the stand,

and then they become counterfeiture,

and this becomes a very moral issue.

If anything, the government should guarantee

the weight of gold and silver,

our founders tried to do that

by saying only the gold and silver could be legal tender,

and they did have weights of the precious metals.

But that introduced this whole idea

that they could run up these debts,

and then print the money.

And what does it create?

It creates this dependency on the welfare state.

And the other thing that is my big bugaboo

is the starting off and the continuation

of useless silly immoral, ridiculous wars

that are so endless in my lifetime,

when I look at just how many people have died

from most wars that shouldn't have been fought,

and there comes down to the moral issue.

So money, monetary policy,

and the type of money we have is really a culprit.

Something that has to be respected.

But I think it's better that the market does this

because we know most people realize

that if you're a counterfeiter,

that's pretty serious.

The government is going to be right on your doorstep,

and you're going to be in big trouble

if you counterfeit the money.

But when government counterfeits the money,

they get rewarded.

You know, they fight wars that we win wars

if we do this and we pass out the money

until the money loses its value.

And that's what we're going through now.

It catches up.

It isn't like if you do A, B happen.

You do A, maybe B will happen right away.

Maybe it will happen a while later.

But eventually the rules still hold there.

If you debase the currency,

you're not going to maintain order.

You're not going to maintain steady prices

in those units of account.

So it is an immorality that is overly tempting

for governments to always have

because they get to do their bidding

and fight these wars that are so unnecessary.

And welfare, you say,

we don't you care about the poor people?

Yeah, that's why I don't like that system

because it doesn't work.

It does on a short run raising.

On a wide.

But just think about what's going on right now

the government is trying to help the middle class

and the poor in this whole system

that's coming apart is hurting the people

in the middle class and the poor

because they're the ones that are stuck

with the price increases.

And yet they inflate it and run up the debt

and they still do it because we care about the poor people.

Well, if they did, they would let the people alone

and let the volunteerism take care of these problems

because I'm convinced the freer society,

the more prosperous society will be

and there are more peace that we will have.

Okay, so go ahead.

I couldn't agree more.

Sorry, I was chomping at the bet to jump in there.

I couldn't agree more.

So a couple of points that you made,

I think were really important.

First of all, you know,

the printing of money to simplify

has become an incredibly important political tool

but it is done in measurable damage to the economy.

Listen, very simply,

you step in, you're a president

and you have a recession on the horizon.

You got two choices, right?

One is you knuckle down,

you bear through it,

you go through tough times

and you get out the other side.

That doesn't lead to re-election

even though it's the right thing to do.

The other alternative is you pressure the central bank,

you lower rates, you stimulate,

you kick the problem down the road

and you let the next guy deal with it.

And that's been the issue.

We've done it time and time and time and time again.

I mean, the last budget surplus we had was under Clinton

like a quarter of a century ago.

It's an absurdity.

So there's this sort of crossover

between politics and economics

and it creates a massive problem.

The second thing you mentioned,

I think, is as important.

Anybody that thinks stepping in

and stimulating economic growth protects poor people,

it does the complete opposite.

It really affects the working class.

Scott Besson wrote an op-ed in the Wall Street Journal

a few months ago.

He was talking about the Fed's gain of function.

He used a medical analogy.

But basically, what he accused the Federal Reserve of doing

was using what he termed extraordinary measures,

low interest rates, massive quantitative easing,

which had permanently distorted the economy.

But the explanation, I think, was very good.

He said, listen, when a central bank

prints massive amounts of money,

essentially the first place that printed money goes

is through the banking system.

So the first place to see inflation

is in asset prices.

Now, the problem in the United States is this.

10% of the population,

own 90% of financial assets.

So what, and by the way,

it's heavily concentrated in the top 1%.

So what happens in reality?

Is the top 10 and 1% get way richer

as the value of their assets are inflated,

stock portfolios, houses, all of it.

Then, as that money bleeds

through into the broader economy,

they have to spend more on bread eggs and milk.

Well, the problem is the bottom 90% of Americans,

who get no real benefit from asset inflation,

and then they just have to bear the cost of higher prices

since the 70s, since we've been removed from the gold standard,

$50 trillion has disappeared from the bottom 50%

and gone up to the top 10.

Here's a frightening statistic.

Today in the United States,

the top 1% of the country,

control 37% of GDP,

the bottom 50%,

two and a half.

And I think the Federal Reserve,

money printing and a massing debt,

have a big part to play in there.

You know,

it's always thought that,

well, all we need to do is change the political parties,

but unfortunately,

this philosophic approach to money and debt,

and how this money gets spent,

it's bipartisan,

so you change parties,

but not much improve.

You'll have a improvement here or there,

but it doesn't seem to be the solution.

I think there's a bigger picture,

because obviously,

there's a philosophic element to this,

because, you know,

I don't think that somebody come in and say,

well, let's design the program

to correct all the problems.

Well, you'd have a lot of paperwork to do,

and say, well, do this,

A, B, C, D,

and all this,

and it wouldn't work at all.

But there is one law that could be passed,

it's a thoughtful law,

and that is natural law,

that you're not a lot of used violence,

that you can't lie,

you can't cheat,

you can't kill,

you can't do any of these things.

And people say,

well, we're not a lot of do it.

Yeah, that's true.

We still would be punished

if we commit those crimes

like counterfeiting,

money and all these things.

But if the government does it,

they can't reward it.

And how do they do it?

How do they adjust to it?

Do they feel guilty about doing these things

that backfire on them

and people suffer from it?

They ignore it,

and what else they do?

They said,

you people who pester us

about telling the truth,

you're wasting your time,

because nobody can define truth.

What your truth is is somebody else's.

But believe me,

they've been dealing with that issue

for thousands and thousands of years

about trying to figure out what is truth

and to try to work in one direction or the other.

So unless we address it in that bold way,

I don't think so,

because they always come up with an answer

that I decide this.

I'm the king,

and this is the way it's going to be.

So it isn't that complicated

if you understand why it happens,

because people think governments are special.

What they're doing is good for us.

They're starting a war.

We'll send our kids over.

It doesn't matter.

They're waking up, though, to this.

And they're waking up to this monetary issue, too,

because there was a time

when people just made fun of us

who believed that we should talk about

the Federal Reserve and inflation.

So,

Philip,

is there something our viewers can think about and do

and maybe get some more information?

I know most of our listeners know a lot

about the monetary issue,

and they may be,

but maybe there's something there that was still

like to get more involved,

because we started the program

about whether the case for gold has changed.

And I think our answer is no,

there's still a case for gold.

So what if they want to get more involved?

What might they be able to do?

Yeah, look, I think we've got,

I don't know if we have,

but the case for gold, I would say,

is stronger today than it's ever been.

And for us at birth,

we believe,

we're big believers in information.

And we feel,

that's why, like I said,

shows like yours,

which are so informative,

or a great platform for us as well.

So we feel the more informed people are,

the better decisions they can make for themselves

and their family.

So what I would suggest everybody who's watching does

is request some information to do it.

All they have to do is text Ron,

R-O-N,

to 989898.

Again, text Ron,

to 989898.

Get access to information guides on how

and why to buy precious metals in this climate,

whether it's cash sitting in a bank account,

losing to inflation,

or people who have a retirement account,

who want to protect any portion,

they can do that.

We can explain how,

and like I said,

why it is such a good time to do it.

So again,

Ron,

to 989898.

Information's free.

All we suggest is people read it,

and what they do from there is on them.

Very good.

And Phillip, I want to thank you very much for being with us today,

and I know you'll be back again someday.

And we will continue the process of trying to explain the issue

of sound money and limited government and liberty,

because that's the basic function that is going to be necessary

for people to understand.

I want to thank our audience and our viewers for tuning in today

to listen to this program.

And please return to the Liberty Report soon.

Thank you very much.