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China just killed paper gold trading | SPONSOR
00:30:26
China is dismantling paper gold, and the U.S. just uncovered trillions in fraud. What does it mean for your money?
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- [00:04]
A
If you cannot hold it, you don't own it.
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B
Central banks have been buying gold like crazy.
- [00:08]
A
Value your wealth in ounces versus depreciating currencies.
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B
Welcome to the Real Money Show. My name is Jeremy Wiseman. As always, I'm joined by Jerry Coraya. How are you doing, Jerry?
- [00:23]
A
Very good, Jeremy. How are you?
- [00:24]
B
I'm doing, I'm doing very, very well. Halfway through the summer already, summer's already moving very, very quickly. It's great to be back here at Rebe.
- [00:32]
A
Yes.
- [00:33]
B
And we want to try to just talk a lot more bigger picture. But there's some other information about a recent, a recent executive order that we want to get into and how that could relate to the US debt as it's fast approaching 40 trillion and what it can mean for trying to pay back the debt. But you know, Jerry, look, we see gold has had a really good run in the last year. Silver's had a great run in the last year. A lot of people are concerned because it, it really moved quickly at the beginning of this year and has pulled back. And there's a lot of questions about where it's going to go from here. And I think ultimately we want to look at the big, big picture because all of the fundamentals are in play for much higher prices. And I think that when we start to connect the dots of all of the developments around the world, you start to get very excited about where the market's headed. And for me, you look back on the beginning of the year, felt like great proof of concept. You know, it can get there, but you want it to get there in a, in a bit of a more controlled manner. Right, Right. So speaking of connecting some development dots, why don't we start there? There's some, some great new stuff that's developed. I think the biggest one is we're recording today on the 23rd and tomorrow in China is supposed to be a big day. I don't know if it's going to affect the market so much, but it is supposed to be a big day for the metals market. Tell us a little bit about that.
- [02:05]
A
So China officially coming up, July 24th is officially through the Shanghai Gold Exchange, eliminating paper gold trading. Now this is very significant for the precious metals industry and sectors and exchanges around the world, especially when it comes down to pricing because elimination of paper means elimination of a lot of supply. And remember that gold, the China's market is the number one gold producer as well as markets and they're obviously a part of the BRICS nation. So we're seeing a lot of changes, happenings, happening with the BRICs revolving around pricing. And this is expanding the pricing away from the hegemony and the, the pinpointed control of just London in New York, two places that do no mining whatsoever. Relenting this, this control or having to share or compete with different prices. So when we talk about paper, what would that be? That would be the fictitious ounces. We know that those are just fractional. There are so many X amount of paper ounces for one ounce available, approximately 100 gold ounces in paper form versus one physical ounce available. And for silver it's about 400 to 1, 400 paper versus for every one ounce. So that's fractional metals. And we also have to focus in at home fractional reserve currencies and fractional reserve banking. That's a big issue. So this is a huge, a turning point or a huge development as India has announced some new Rails, we're using that term a lot Rails and bridges that all, all I guess complement the competition in pricing not just in the US but internationally and eventually all come into common ground because as Gresham's law states, the good money or the good pricing will eventually chase out or deem irrelevant the bad.
- [04:00]
B
Yeah, I think there's two elements to this story in China. The first is that I like the idea that what the government is trying to say is this isn't an investment, this is an asset. An investment has counterparty risk. An investment, you're counting on that counterparty to do a beneficial job for you. Things can go sideways very quickly. Gold has never dropped to zero. Silver's never dropped to zero though Silver, I don't know what they're doing with the paper trading. There's but the idea of holding an asset versus an investment, I think this is highlighting that on the other side and we can get into that a little bit more the idea of investment versus asset because that's a big, big part of it and it's a, it's a challenge, right? Because look, many people approach the market with an investing point of view versus acquiring an asset. It's a very different thing. The other part of it, very quick is that, and you mentioned it briefly, is the competition. I think competition is a very good thing. It's going to either force other exchanges and platforms like the comics into being more transparent, more honest and more honest or they run the risk of becoming irrelevant. Because as you said with Gresham's law, the idea is going to be well, if I can get better pricing And I know that they have the product. I'm going to move over there. I don't need to deal with the distortions being caused by paper.
- [05:31]
A
Absolutely. And this is a big development because if we look to China, they've been in the news a few, for a few other headlines this week through Goldman Sachs revealing that China exceeded the amount of gold acquisition that they were reporting about by five times. So this is very important to understand what they're acquiring. They're acquiring something that they call high quality liquid assets and talking about, you know, paper and investments and financialization. This is a transition away from the old economy of over financialization over to an asset based economy, an asset built economy. And as we see China accumulating assets, their assets are being accumulated in ounces as opposed to financials denominated in depreciating currency. Is that has to be the trend going forward that currencies will be continued to become devalued as time progresses. And this is also in line with the, the genius act failing to come out with the rules as to what collateral is and what is going to back these stable coins. What is true collateral? Collateral as we see there is a common denominator here of assets, monetary assets, collateral and backing things up. These rules are very important because they tie in and it will eventually tie into a trend that we will continue to follow and share about the treasury and their debts.
- [06:55]
B
Yeah, I think backing assets and understanding assets. We see banks, central banks are acquiring gold. It's a high quality liquid asset. They're accumulating assets, not investments. And the idea is that when there's a, when there's uncertainty, gold provides that certainty and the central banks are looking for that certainty. And it feels like whatever your world view is, and we don't know specifically what the worldview of these central banks are, that there that gold is going to win on either direction. If you think it's going to hell in a hand basket. You want to have physical gold, it provides certainty when there is no certainty. And maybe it feels for some people that things are way too up in the air or the changing of the tide, the fourth turning or whatever it is, it's, it's too much to bear. I want to own physical assets like gold to protect against that and keep me sheltered from that storm. Or, or it's. Are we moving towards a potential financial system where there is more transparency, there is more balance? I would put bringing industrialization back to North America as part of that. Yes, balancing the tide. And if there's going to be something like that, and this is a segue, by the way, then how do you handle the debts? How do you get to a place where the, the playing field is level? And I feel that when you're looking at all these developments, even, even the fact that China's implementing this and just built an exchange or a platform, a trading platform that, that was tested in Hong Kong recently, backed by Shanghai, backed by the government and other major banks as part of that competition. But you don't build these things if you think the price is going to zero.
- [08:43]
A
Absolutely.
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B
Or if you think the price is going nowhere, there's any risk. There's no point to do it if you don't see a future in it. The fact that they see a future in it says this thing's only getting started. I think like what we saw in January as an example to come back to biggest head fake. I think many people are going to realize in three, four years that this was the beginning, not the end.
- [09:06]
A
Oh, yes.
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B
Getting back to the debts, though, because that was my segue.
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A
We're there, we're segged.
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B
So how does the US Handle the debts? You want to get to a place where no one's cheating, et cetera, et cetera. So we have an executive order here because the. Why are we talking about this? Because the assumption is that the way to get rid of the debt is you're going to print your way out of it or you're going to inflate your way out of it. And, you know, building up the economy might mitigate that a little bit. Lowering energy prices may mitigate that a little bit so that the everyday person isn't feeling it as bad, but you're still going to pay it back with dollars that are worth less.
- [09:49]
A
Right.
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B
So that's the, that's the key for whatever you hear day to day. Like, what were you saying in the office about yesterday? The chances of a rate hike were like 10%, and now they're nine. What is it?
- [10:05]
A
Yeah. So just very quickly, last week, the CPI, the US CPI inflation data came out lower than expected, actually 6, the lowest in six years, shocking everybody. So that the, the odds of a rate hike dropped to about 8. Some say 8, some say 12%. I'm going to say 12%. The chances of a rate hike, that was about seven days ago, the 14th. It's the 23rd today.
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B
Okay.
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A
And then today there was a bomb. So the Houthis struck the Saudis and then oil went briefly over $100. So we're being whipsawed and now the chances of a rate hike has jumped from 12% up to 80%. So Canadians trade in this, investors, savers. We don't know where to go. We are all of being tossed to and fro with expectations. And the takeaway I guess is we cannot be confused by these probabilities and these futile predictions. We look at the trends like the, the Chinese and what's being built in the US and these executive orders, these are trends that are very relevant and they do tie into us here at home. It gives us solace and it helps us to neutralize all of these noise events and helps us to neutralize them with the neutral asset like gold and silver.
- [11:19]
B
Right. Which is funny because we're about to jump into some speculation.
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A
So let's speculate.
- [11:24]
B
So everything we just said, just ignore it because.
- [11:27]
A
Just put a pin.
- [11:28]
B
But the reason is because, you know, when you think about these debts, how are you going to get rid of it? You're either going to write it off as complete losses or you're going to inflate it away.
- [11:35]
A
True.
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B
And somehow and grow. But you're not going to grow your way out of that. So talk to us about this executive order so we can, we can get to work here.
- [11:44]
A
Yeah. So there was an executive order signed by Donald Trump back last year. It was March the 2012th, the 2025, the executive order on fraud. The U.S. treasury screened since then more than 885 million payments. Total $2.77 trillion. And that's in one year. So the, that was the government account availability offices. They found that approximately $500 billion of taxpayers money were being lost annually. So every single presidential term, that's four years. So we could do the math. This is trillions of dollars on our backs based off of the backs of the taxpayers or the depositors money. Remember every time you deposit funds here in Canada into the bank account, the government can use a fraction of your deposits as their collateral to fund whatever they would like to fund.
- [12:33]
B
Aren't they? Did you hear about them lowering that fraction, by the way?
- [12:37]
A
It's actually zero in the States and it's, it's, it's some type of, I
- [12:41]
B
thought it was like 15% here or something.
- [12:43]
A
And they're lowering it that was way. It's, it's been lowered a lot lower than that. But a lot of that stuff went to Medicaid. A lot of the stuff went to, you know, PPP loan activity, government contract, home health care, hospice, healthcare fund. But you name it, they're creating these Offices that are supposed to steward wealth, you know, for the betterment of society, but it's actually feeding and lining their pockets. A lot of money laundering and we don't know where the money is. But this executive order is going down those rabbit holes to find out what money was illegal. And approximately 4,000 payments amounting to $100 million were impounded. So they blocked. That's what impoundment is.
- [13:23]
B
Talk to us, talk to us about impoundment.
- [13:25]
A
This is going to be important is something that the, that the US President had the power with the US Constitution to block payments. If the con, if he found Congress slated taxpayer funds to go to fund something unethical or something that is not in the best interest of the US he has the power to block the payments. And that's in essence what he did. He actually said he was going to do that back in 2015 and he, the fact that he's doing it now, um, it's, it's definitely speaking volumes to me. But this is moving towards oversight following where the money went. And it does bleed into Canada. You know, when you're using things like fraud, when you're using things like terrorism and these big words that are give a country jurisdiction to go and check out banking records anywhere, this can bring a lot of things into line. You know, I'm speculating, let's stay with the debt.
- [14:17]
B
So, so this was really interesting to us because you, you start to look at this and, and you're seeing in the States they are going after fraud. First there was Doge and you know they're, they're going after, you see the stuff in, in Minnesota, California, you see that they are going after fraud. So here's the question. If, if the fraud amounts to and, and you see them stopping payments to different state, but if the fraud is starting to amount up to trillions, is do you think that there's a potential here where they could effectively in a way write off a bunch of the debt to say look, we're not going to pay interest on trillions of dollars that we just discovered were fraudulent?
- [14:59]
A
I think that's the case. You know, a lot of Canadians and a lot of gold and silver Advocates thought that July 4th we were going to see the, the Independence Day gold backed gold standard being re implemented or reinstituted or unsuspended. But looking at the debts and understanding what's happening, I find it very, they do have the ability to wipe out the debt. To answer the question, they do have that ability to erase the debt. But gold being honest Money being divisible, durable, recognizable, scarce and, and, and intrinsic. These are, these are the, these are the facets or what Aristotle Sundays. These are five tenets of what makes money. It's honest money. Honest money cannot and should not back dishonest unlawful debts. So we have to figure out what debts are, should not be on the backs of the taxpayers dollars. Is it 39 trillion? Because right now the US federal debt totals 39.4 trillion. We just blasted through 39 US annual interest expense on that debt reach a record of 1.35 trillion.
- [16:05]
B
I just want to interrupt you there because you, what you said there was important. You're, you're, you're alluding to. If you want to get to a new system that could be backed by gold and we're looking at you know, tether backing their coins with stablecoin with, with gold acquiring a lot of gold in, in their portfolio that to get to that level you need to make sure that you're not paying through, you're not paying fraudulent payments still. In other words, you want to start with a clean slate. But when we were first discussing this topic though, we were asking ourselves what does this mean for the price of gold?
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A
Right?
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B
So how much? Let's say they found $5 trillion in, in, in fraud that they could, they could effectively wipe out and say well we're not going to pay interest on that, right? You're still at 35 trillion. It's not like they're going to find half of it's gone. Right?
- [17:00]
A
Very true.
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B
So where does the price of gold go in that, in that system?
- [17:07]
A
So be prior to the gold price suspension in 1971, the US was, was one of the most prosperous nations. Between 1940 to 1971, whatever the debt was, x amount of that debt, which is x30 of that debt had to be gold. Knowing that the debt now is 39 trillion. Gold only represents 3% of the 39 trillion. So we could just do math, right?
- [17:30]
B
Because stuff Bessant said they have a trillion worth of gold.
- [17:34]
A
They have a trillion worth of gold with a chuckle. Is it there, is it not? It's there to speculate. But if they do have a trillion dollars worth of gold, there is a way through the treasury with their gold revaluation account to actually revalue the gold. But if you can erase 5 trillion as you said of gold or 10 trillion, or is it 20 trillion, we know what number we have to revalue to. So if we have to reevaluate to match 30% of 39 trillion in debt. We have to multiply that gold price, which is now, you know, now up to, you know, 10 times. So $40,000 gold price, do we have to go there or just a 20% like your down payment for a house? What we're talking about here is collateral. This is an asset, a monetary asset that has to be brought back into the fray. And it will be eventually.
- [18:20]
B
In other words. In other words, it, it removes crazy prices. Yeah, expectations. So you know, when you hear people talking about forty thousand dollar gold. Well, if you erase a lot of the fraud, maybe you're, you're not having to, to revalue it that much higher. Right. What about deflation? What if they manage to get the debt under control? What if they lower interest rates for six months, get it down to 1%, you know, readjust all the, all the, the interest payments, lock those in, get the economy going, lower energy prices, everything starts to cook. What would happen if there was a, if you started to experience deflation or is that pretty much off the table when you have, when you do have this amount of debt and there's no clear way out of it?
- [19:11]
A
Well, we, you know, it is definitely multifaceted. We have to, energy has to be harnessed, it has to be strengthened nationally at home to bring down the prices. Find multiple sources of energy, nuclear, not just oil. So eliminating that choke point, you start dealing with debts, getting that down, interest rate, interest rates as well have to come down. So you could refinance. It's multifaceted. But I've always pondered this scenario is, does it, what does deflation and a deflationary system or an event look like? In my opinion, anything that has benefited from the excess stimulus, if it was, you know, certain, certain markets of real estate that really benefit from the money printing and the printing press on the backs of your balance on the backs of your backs and taxpayers, the taxpayers backs, then that original value or it will have to go back to the mean or, or closer to the mean. Because if you're bringing down natural resources and their prices, the cost to build a house should be cheaper along with the energy it costs to make that in manufacture. So we're going to see how this plays out.
- [20:14]
B
That's gonna, that's gonna reverse the winners and losers.
- [20:16]
A
It should.
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B
Right. Because, because then people who can't get into the real estate now will be able to get into the real estate now. And those, and then those that got in at higher prices are then all of a sudden going to take a, take a loss on it. Potentially, you know, look, I think that to bring this back to the precious metals, this is where hedging comes into play, where having an asset is very important, where you're not hedging your real estate portfolio. You know, those that bought gold and real estate prices come down, they'll be really excited if gold does nothing and the prices of real estate comes down. Your winner. Right. Gold wins in a deflationary environment as well, because it's about who loses least. And when something is naturally finite, you know, you can, you can make houses you can't make. You can only add to the gold supply by about, what is it, 1, 1 point, 75% a year, which is interesting. That would be a great inflationary number.
- [21:14]
A
Right.
- [21:16]
B
But at the end of the day, having an asset and building wealth is much different than investments. And in our opinion, it's important to have an insurance policy. If you have life insurance, you have car insurance, you have home insurance and all of these things, you hope it doesn't pay off, you hope it doesn't pay out, you hope you don't need it. And you know what? I have a lot of gold. I hope I never have to sell it. I really do. I hope I don't have to sell it. And I've always thought that the only reason I would sell it is because I'm. It's either a really desperate thing, like you really need the money, or it's a really positive thing. Something great is happening and this is worth taking that shot with. Right. But generally speaking, I find that personally and I really, I, I hope if I could give anyone a takeaway, is that buying and buying gold, if it's just one ounce, should feel really good to be adding wealth to your portfolio. It's not about, I'm buying gold because I hope it goes to 8,000 or I hope it goes to 10 or 40, whatever. Okay. It's about, I'm building wealth for the future. It's been around for 2,000 years. It's going to be here for another 2,000 years. It's something you can pass on through generation and that they can appreciate it and maybe fondly.
- [22:40]
A
Yeah.
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B
Hey, my dad gave me this. My mom gave me this. You know, we have clients who speak about products that they received or their experiences with gold and silver through their parents. And it's always like the best phone calls we have. You know, when you, you say yes, you, you got an education through it as well. And I know for, for myself again with, with my son, giving gold has been the best And I remember we gave an ounce. Sorry, not an ounce. It was a 10 gram bar to his cousin when she was born. Man, that's, that's gone up nicely. We didn't do an investment. We didn't give cash. Would have been worthless. Yeah, okay. It would have been spent. Oh, maybe put it into an resp, which is great. Don't get me wrong, it's done. We have gold in the resp too.
- [23:24]
A
You can do that as well.
- [23:26]
B
I just think you're building wealth, not thinking about the investment and building wealth over time. In a, in a world where gold has gone up over 700% in the last 20 years now, it's not really gone up. What's happened is that the Canadian dollar has fallen against gold. Gold does nothing. I think that in this current economy I don't see a situation where all of a sudden the dollar gets stronger. And so I think right now you have two major reasons to be holding it.
- [23:56]
A
Yes.
- [23:57]
B
Building wealth and hedging.
- [23:59]
A
Yep.
- [24:00]
B
Uncertainty and the collapse of the dollar. And that's, and I'll keep going, but
- [24:05]
A
that's the certainty and that's what we have seen over the past 15 to 20 years is that all the major currencies are declining versus the, you know, the purchasing power or the power of gold. All currencies are losing their purchasing power and will continue to dwindle because the average fiat currency lasts for about 50 to 70 years. And that term fiat is Latin for let it be. So this power of your paper currency gets its power or influence because of decree. Because I say so. I say it has, it's worth $10 because I say so. But that doesn't last. It never lasts throughout the years. And it's our, and it's our duty and our honor to help people like yourselves to convert out of paper currencies, especially for the resps, for the kids, for generational wealth builders to get out of fiat currency and into something tangible, something that institutional wealth is moving heavily into physical precious metals. Central banks continue to buy. The World Gold Council surveys 90% of these institutions. Smart money, central banks and institutions. Why are you buying, why are you holding gold? They're buying it for crisis protection, currency protection and a long term store of value. If these are things that you're looking for, finding it in financials and things that are denominated, your stocks, your REIT portfolio, your, you know, your paper ETF instruments, they're all denominated in paper currencies. And this is how we secure wealth in, in uncertain times. You want to be able to know that it's there. And as Mark Twain once said, people are more concerned about the return of their money than the return on their money. And with gold and silver you're going to get both. Because going back to the top of the show, going back to January, it was speculation that drove up the markets, gold and silver to all time highs. We will head there and when things get so uncertain and we get the phone calls to field and it's our honor to do that as well, pick up the phone. We'll spend half an hour to 45 minutes with you to determine to clarify your why. Why did you why do we own physical gold and silver outside the digital banking system? Is this still the right place for us? We'll get will connect the dots and take a zoom out. It's very important to take a macro picture of the super cycles and we are still Jeremy within the third major super cycle going back 50 years, precious metals, both gold and silver have experienced two from 1970 to 1980 and from 2000 to 2010, both average gold 1400% and silver 2200% average. In those first two cycles that lasted 10 years each. The third cycle that we are currently in began in 2020 16. So we still have a few months, maybe a year before we see the culmination of the next third cycle that we are currently in. But during those four first two cycles in 70 and in 2000s, we did have 50% pullbacks, which is what we just went through. So when we know these cycles that do happen, it's a healthy flush out. We're flushing away all the excess speculative paper margin fractions that created artificial supply and speculation. We're cleansing that out and we're regrouped. We are resetting and repositioning for a mighty move in the market. Because what's holding gold and silver back is futile. Iran and interest rates, two things that we just talked about. Last week they had a the fed funds tool of Fed rate hikes had the chances of a rate hike at 12%. That was eight days ago. A week later, now it's 80%. We're being whipsawed left and right. This is how the market's been moving sideways over the past seven months, held back by oil in Iran. When these things move to the sideline and we move away from oil dependency on the US and moving away from oil markets having power over the monetary policy. Goodness and and war. Having a power over the monetary policy and going back to a neutral asset like gold that's when you'll see the room that Warsh has to take for his promises of bringing the, you know, bringing rates down. That was his job, bringing credibility back to the dollar and prices will stabilize. So rest assured, we are in a sure asset, a certain asset class and where the smart money is definitely piling and you don't want to miss what is to come, because I'm super excited for those who are hanging on. And if you have to sell, you have to sell. And unfortunately, in Canada, people are broke. You know, if retail is slowing down. And in Canada, we have to find the few exits, and this is one, definitely one exit you do have take advantage of.
- [28:41]
B
So what we do at Guildhall is we help people to hold physical assets, to accumulate those assets. And one of the ways that we work with clients is to hold it in registered accounts. So in the registered account, clients can hold it directly. It's fully allocated and segregated. So it's held in a vault facility outside the banking system. Clients have access to go and personally audit their holdings. So it goes with our motto, if you can't hold it, you don't own it. And so you can go and test that system if you wanted to deregister. So maybe there, there might be withholding taxes applied, etc. But you can, you can take delivery of the product as well if you decided, ah, you know what, in this situation, it works for me. I can take the product at this point. So we walk you through it, we'll help you through it. We can talk all different strategies as well. We've been in the business, I've been in the business for over 20 years. Jerry's been in for close to that as well. So if you want to get involved in holding physical gold in your portfolio. We didn't get to too much silver today. We'll get to that the next time on the Real Money Show. But we want to thank you for joining us and we can't wait to speak to you soon here on the Real Money Show.
- [29:49]
A
Foreign.
- [29:58]
B
Money show here on Rebel News Saturdays at 1:00pm if you've missed an episode, you can also catch the Real Money show on our YouTube channel at Guildhall wealth or follow us on Spotify and follow us on Twitter as well. The number again, 1-8778-silver. The website Guildhall. Learn how to have physical gold and silver in your portfolio and we look forward to speaking with you soon.