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What’s a Trillion Here or There? – Episode 038

No government in history, once detached from the gold or precious metals standard for their currency, has ever lasted past the 40-year mark before morphing into inflationary panic and disaster.

Last year’s G20 economic summit basically admitted that Keynesian economics was failing, but they didn’t have a clue what to do about it. Our politicians are on a “funny money” drug high, but it’s we, the citizens, that are suffering the crash of their addiction. Civil unrest the world over concerning rising prices in basic necessities is just the beginning as we transition into a hyper-inflationary period not just here in the United States, but globally as well.


Off The Grid Radio
Ep 038
Released: March 11, 2011

Brian: Ladies and gentlemen, once again welcome to Off the Grid News – the radio version of I’m Brian Brawdy, as always here with Mr. Bill Heid. Bill, how are you this morning?

Bill: Brian, never better. We’re very excited to have this guest today. The precious metals industry – the precious metals are generally very bullish right now. The bulls are raging and so we’d love to talk to our guest about what’s going on.

Brian: Fantastic! Then let’s go ahead and get right to it. Calling in – you know, and I think about this, Greg – 25,000 people that you’ve been addressing here over the last few days and hanging out with up there at the PDAC. I want to thank you in advance for taking time to do our show. Ladies and gentlemen, you know him from the We’re here today with Mr. Greg McCoach. Greg, how are you sir?

Greg: Good Brian, glad to be here.

Brian: Bill, I know you had emailed me a long list of questions that we had for Greg. As I said in the intro, he’s hopping today. He’s up there at the PDAC in Canada. I know that, Greg, you were saying that in terms of prospecting and precious metals and natural resources and the like, everybody that’s at this conference has their fingers on the pulse, don’t they?

Greg: Absolutely. You see that this conference is so robust. It’s almost like sardines on the floor here. A lot of excitement. There’s plenty of opportunity. People are making money and they sense that there’s plenty more money to be made for many years to come here.

Bill: Greg, this is Bill – tell me, for example, what’s the PDAC attendance level on a year when the metals aren’t going through the roof. What’s it look like then? Is it 25,000?

Greg: Yeah. Well, it’s 25,000 this year. Now, let’s compare it to 2008 when we had the meltdown late fall, right? The PDAC always happens in early March. So in early 2009 it was like a ghost town here. Not much happening at all. Over the last 10 years, the PDAC has been very robust as far as attendance goes. I’d say this year is the best we’ve seen since I’ve been attending here the last 10 years.

Bill: So for people, Greg, that don’t really – the uninitiated, as it were – tell everyone what exactly the PDAC is and roughly why it’s in Canada.

Greg: Canada is the home of the mining talent, the exploration talent, that exists in the world. Most of the junior mining companies and majors are all headquartered here in Canada. Canada has a rich history of mining. Their country is amazingly blessed with natural resources of all kinds – oil and gas, precious metals, base metals, rare earths. So Canada is the place you want to be and you want to know about when it comes to mining. Everybody flocks here from the world. You get geologists, you get prospectors, you get mining executives, and you get retail investors who want to invest in this sector. They all congregate here every year in Toronto at this conference and exchange ideas. Try to do deals. There’s all kinds of deal making going on with ground floor opportunities, latter stage fields, mergers, acquisitions – you name it, it’s all happening right here. Very, very exciting time with what’s going on in our industry. Great opportunity for investors. Most of the investing world still doesn’t understand what’s happening here. People have not paid any attention, even though the precious metals themselves, just owning physical bullion and precious metal junior mining stocks are the best performing asset classes over the last 10 years. How is this not being touted in the mainstream media? Well, that’s because government doesn’t like rising precious metal prices because it exposes them for the fraud that they are. They downplay anything to do with precious metals. If that kind of performance was had by the S&P 500 or the Dow, you’d read about it in every media venue worldwide, right? But because it’s precious metals, very few people even here about or know about it, and this is an amazing opportunity that is nowhere near its conclusion. We’re hearing a lot of talk in the mainstream media that when they do mention gold it’s always “gold’s in a bubble … gold’s in a bubble …” Not even close. We’re not seeing – a bubble is defined as like the internet days when you had 90 percent of investors were all invested in the same sector and prices were unsustainable. Companies were trading at 300 times projected earnings. That was unbelievable, unsustainable. You have a sector here that’s done very, very well for 10 years but you still have such a small group of the total investing public even looking or paying any attention to the precious metals or mining stocks. So we have a long way to go. The precious metals, I think, are the main focus, but the base metals will do well for many years to come as well, even though they might not perform as well as the precious metals here in the next four or five years.

Bill: So Greg, as we talk about some of the rising prices in the metals, let’s talk about some of the drivers of the prices. I was in China not too long ago and, as you mentioned in the February issue of the “Mining Speculator,” there’s a tremendous interest not only among consumers but the government, in terms of telling their citizens to purchase gold and now silver. In addition to that – you probably have some more data about the China ploy, what’s going on in China. That’s going to affect what happens here in America in a very profound way.

Greg: Absolutely. What we’re seeing is that China, or what we refer to as the BRIC countries – BRIC meaning Brazil, India, Russia and China – China being the biggest, 900 pound gorilla in that group. But all these countries are going through amazing development and the resurgence of infrastructure building and the masses of these populations, masses of these countries are starting to have an income shift. Their incomes are rising and they want the goods and services that we take for granted here in America. They’re starting to buy refrigerators. They’re starting to buy cars. They’re starting to buy cell phones and electronic gizmos and gadgets. They represent such a large group of people – 1.3 billion in China, another 1 billion in India, Brazil, on and on and on it goes. When you look at this, this is what’s creating what we refer to as the super cycle – super cycle for base metals because in order to have all these modern conveniences it takes minerals. It takes extracting metals from the earth to have all these modern things of society. You can’t have a car, a house, a building, a road, a cell phone, a computer – without these metals. When you look at the numbers, it’s staggering what would have to happen based on the current mining output that we have. We’re nowhere near what would have to take place to provide for all these new people who suddenly have money to consume. The opportunity from an investment standpoint is just – it’s amazing. This is a once in a lifetime opportunity. That’s just the base metals. As good as that scenario is, despite the fact that we ought to understand that there’s going to be volatility along the way – there’s going to be sharp ups and downs, but overall the super cycle of these people moving forward is going to be very beneficial to the mining business, I think, for another 10-20 years. Now let’s focus on the precious metals, where the bigger opportunities are in the very shorter term. Let’s say the next few years, five years – even 10 years, I think for precious metals. Why is that? That’s because the governments of the world bought into Keynesian economics, hook, line and sinker, after World War II and they’ve been practicing …

[0:08:47 call dropped]

Brian: Well, why don’t we go ahead – Bill, you’re as good an expert as I’ve ever heard the opportunity to sit and discuss Keynesian economics with. So while Jeremy works to get Greg back on the phone, where do you think he’s going with this? We think about the different schools of economics and I happen not to be Keynesian, but for those of our listeners that may not know what that means, could you give us a quick thumbnail?

Bill: Well, from Lord Keynes, the economist, basically Keynes’ philosophy was don’t worry about tomorrow, take care of today. Keynes was the ultimate existentialist as far as his economic theory. He’s famous for the line “in the long run, we’re all dead,” which he was a gentleman who really didn’t have any family so he wasn’t worried too much about his family. He was in it for himself as an economic advisor from the London school. He really would say “you do anything that you can do to stimulate growth, to stimulate something, today. To hell with the next generation. To hell with 10 years from now. I want economic results now.” So if I have to … QE1 and QE2, my way, to making the numbers look good, then I’ll do whatever it takes.

Brian: What a great thumbnail, Bill, because you don’t have to go far in the news and the newspapers, turn on your internet – you don’t have to go far to seeing that playing out today with everything going on at the Fed, everything going on in our economy, the government – in terms of not being able to live within its bounds. I think you nailed it. Ladies and gentlemen, we’re going to go ahead and run to a quick commercial break. Our producer Jeremy will do everything within his power to get Mr. Greg McCoach back on with us. First, a commercial break. When you came back, Mr. Bill Heid, Greg McCoach here, at Off the Grid News – the radio version of the

[0:10:54 – 0:15:13 break]

Brian: Ladies and gentlemen, welcome back once again to Off the Grid News – the radio version of I told you Bill, Jeremy would work his magic. We have back with us, Mr. Greg McCoach. For those of you that may not be familiar with Mr. McCoach, he is an entrepreneur who successfully started and has run several businesses in the past two decades. For the last seven years, he’s been involved with the precious metals industry as a bullion dealer, investor and newsletter writer. Mr. McCoach has years of business experience and extensive personal contacts in the mining industry which would explain, Greg, why you’re at the PDAC in Canada this week. His extensive contacts in that industry provide unique insights that have generated an impressive track record for the Mining Speculator – a site that I’m a huge fan of, as I know Bill, you are too – the Mining Speculator. Let’s go ahead and get back. Bill, I know you had a quick question for Mr. Greg McCoach.

Bill: Well, Greg, we were talking as we lost you and then we’re back from the back – a little bit, Brian and I discussing Keynesian economics. I guess what I wanted to chat with you about is the sort of effects – you mention in the newsletter, and if you don’t mind, let’s cover some of the ground that you cover in the newsletter, because this is what’s producing the effect of higher prices of inflation, of our gutting of our economy and we’re seeing it with higher metals prices. But really, there’s something more insidious going on deep down below. So as we look at Keynesian economics versus classical, I’m talking about moral issues and I’m talking about how Keynesian economics rots or cuts the knees out of a people. Do you want to comment on that a little bit?

Greg: Sure. Absolutely. No, this Keynesian economics – for people who don’t understand it – it comes from a guy named John Maynard Keynes who was a Brit. He wrote economic doctrine that really went in the face of classical or Austrian economics which classical or Austrian economics is about keeping politicians accountable to the people, to having a gold standard like our founding fathers set up for us in our Constitution. Keynesian economics says basically that production is more important than consumption. Supply is more important than demand. Basically, that politicians can’t be trusted. Keynes basically said the opposite. He said consumption is more important than production, demand is more important than supply, turning state law upside down. That politicians are worthy and trustworthy people and you can put your trust in them to do the right thing and that you don’t need a gold standard, that Fiat currency is actually preferable. Fiat meaning the currency is backed by nothing but a politician’s promise. Obviously, you can see why politicians opted for Keynesian economics over Austrian economics, because they’re not held accountable. This is what’s been happening throughout our world since World War II. And like anything, it can have its moment of glory. Basically, Keynesian economics believes that if you pump money into the system, funny money, money created out of thin air, as you pump this money into the system, that it can create a nirvana or a Garden of Eden for everybody so that everybody can have everything in equal measure. Well, it’s a fantasy. It’s a fairy tale. Even though some of the voters may vote for it, it’s not sustainable because sooner or later you run out of other people’s money as Margaret Thatcher said. The politicians have gone this route of pumping and pushing Keynesian economics to the nth degree and it’s not working. There’s times when it works – just like a drug addict, you take the hit of heroin, there’s the high, just as politicians pump the money into the system there’s high. But then after the high there’s a low. Then they have to pump ever-increasing amounts – or the drug addict has to take ever-increasing amounts of drugs to keep the high going. But eventually, there’s an end result and consequences show up and that’s where we are right now. We’re in the consequence phase of failed Keynesian economics. All they can do at this point is use more failed Keynesian economics, meaning pump more money into the system, or intervene to try to save people who shouldn’t be saved. Businesses that have caused the problem that should be allowed to go bankrupt because they made poor decisions. This gets back to the crux of the problem and this is what people need to understand, that this is now failing. And failing miserably. Not only does the G20 – the G20 last year, after they met last summer, they basically came out and admitted that Keynesian economics was failing but they didn’t know what to do about it. We as a people, we have to understand that this is the driver because they have to create so much money now just to try to keep the system going that we see the sheer numbers, the amount of money. The US Government, in the last two years, has probably either spent, borrowed, created or loaned over $12.5 trillion. This is trillion with a ‘t.’ As I always like to describe to my subscribers, you have to understand what these numbers mean, and if you truly do then you understand that this is totally unsustainable. In seconds, in terms of time, a million seconds is 12 days; a billion seconds, with a ‘b’ as in boy is 32 years; a trillion seconds, with a ‘t’ is 32,000 years. So when you’re talking about trillions of dollars like this, that have been spent and can’t possibly be paid back, then you understand where this is all going.

Brian: Greg, could I interrupt? Could you do that one more time? Because I think that would be a cool thing for us to put up on our Facebook site as well, because that’s the first time I’ve ever heard it explained that way, about the seconds, and how it equates and what it would take to get to 32,000 years. Could you do that one more time?

Greg: Yeah. I like to give people a concrete understanding. When we hear this number – politicians talk about billions or trillions of dollars being spent, it’s just a number to most people who hear this. So let’s put it in a concrete example, a text that people can grasp. In terms of time, let’s use seconds – a million seconds is 12 days roughly, a little bit less, but roughly 12 days in time. A billion seconds with a ‘b’ is 32 years and a trillion seconds with a ‘t’ is 32,000 years. If you understand in the 12 months our government has to either borrow or create out of thin air $3.65 trillion just to pay the interest on the short-term treasury bill debt that’s due – just the interest not the principal – just the interest, and our current budget deficit that Obama’s going to sign of $1.65 trillion – that means the government is spending more than they take in to the tune of $1.65 trillion. So you add the $2 trillion that we have to come up with to pay interest in the 12 months and our current budget deficit – that’s $3.65 trillion just in the next 12 months. That alone tells you that this thing is totally unsustainable and cannot go forward anymore. We’ve reached that point where, as always happens with these Fiat currencies, when they fail they fail miserably. What’s interesting to note is that there’s a statistic – no government in recorded history has gotten past the 40-year mark, once they detach their currency from the gold standard or a precious metals standard – could be a bi-metallic standard, gold and silver – but once they detach themselves from that, it’s called a fiat currency. The United States’ dollar, the last connection connecting the dollar to anything related to gold was in 1971. Richard Nixon cut us off the gold standard completely. We became a total fiat currency. 1971 – 2011 – no government in recorded history has gotten past the 40-year mark before more sense of inflationary panic and disaster. Here we are. We’re at the 40-year mark this year and look what’s happening.

Bill: Greg, it’s remarkable. I can’t … if anyone can listen to that and not feel the breadth and depth of what Greg is saying … this isn’t just an abstraction, this is going to affect you, your family, everyone. Greg, I wanted to read Hitler’s comment from your February issue. Do you mind if I read Hitler’s comment about gold?

Greg: Yeah, and basically he was one of the first proponents of Keynesian economics.

Bill: Of course, coin clipping’s been going on for thousands of years, but the terms of the scientific development of it – we’ll read this quote by Hitler and then we’ll probably, Brian, we’ll have to go to a break. Here’s what old boy Adolph said “gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it.” Now here’s the thing – then he says, “anyone who sells above set prices, let them be marched off to a concentration camp. That’s a bastion of money.” Here’s Hitler saying “no gold, no gold,” but my wife’s grandfather, who was one of the first people in with Patton into the mines will tell you, just like the bankers today who put gold down and put gold down, and it’s guys like George Soros put gold down publicly – these mines were full in Europe, in Germany and Poland – these were full of gold, so what Adolph said, Greg, and what he really believed himself were very different things.

Brian: Ladies and gentlemen, on that note, we’re going to run to a quick commercial break. We’ll be back. Greg is with us for the full hour. Back after these commercial words. You are not going to want to miss these next two segments here at Off the Grid News.

[0:25:25 – 29:39 break]

Brian: Ladies and gentlemen, welcome back. We want to get right to it. Greg, I have to tell you, I’ve never had anyone break down for me – two of the most insightful things I learned in that last segment – the definition of a trillion as 32,000 years if you counted those years and the time in them a second at a time. Then also, of course, that no government has lasted longer than 40 years once they go off the gold standard and go to a Fiat currency. Then Bill, before the break, as you know, you were reading that quote from Adolph Hitler and I’d like to get you and Greg to kick that around a little more in terms of he may have been saying one thing, if you study history – Hitler was saying one thing but he was certainly doing something else, wasn’t he?

Bill: So my part I wanted Greg – that I thought Greg should comment on is when your leaders, and of course they own the media so they’re going to control what the media says for the most part – when your leaders are saying, like Adolph said about gold, our leaders basically say things similar about gold. When they say one thing and do another, it’s quite different and you can bet Stalin had gold and Chairman Mao had gold as well in secret places. A current example, and now we’re not comparing old George to any of the three that we just talked about, but George Soros – would you say, Greg, he’s an example of someone that’s saying one thing and maybe doing something else?

Greg: Absolutely. The two most prominent examples we’ve seen just in the last few years is George Soros, JP Morgan Chase, telling their own clients not to buy gold and silver, that it’s in a bubble, and yet behind the scenes they’re buying at a 100 miles an hour. That’s the most modern example. Other examples would be some of these failed dictatorships that we’re seeing – guess what they have a ton of? Physical gold and physical silver. They keep their money in precious metals. Hitler – the whole Nazi war machine – they were literally taking the gold out of the cavities of the Jews that were in their own society. The gold was so valuable to them. They collected all this gold and then we didn’t even find out until the 90s that a lot of this Nazi gold was held in Swiss bank accounts that the public didn’t find out about until the 90s. It discredited the Swiss in a big way when the world found out that the Swiss had kept this secret of all this Nazi gold that existed long after the war had been done.

Bill: That’s a policy that we need to pay attention to because you don’t get the straight scoop on network TV. That’s why you’ve got to go to newsletters like yours, Greg. What I appreciate in addition to the mining picks that you do, which I follow your advice in many of these picks, but I absolutely love your analysis. That’s what we’re talking about right now. Let’s continue on with Keynesianism. You’ve had some great quotes about scarcity. I think Thomas Sowell – you quoted him in there too. That’s something the average person doesn’t understand – the first lesson of economics.

Greg: Yeah, that quote is so apropos today for people to understand, based on what we’re seeing. We see a super cycle going on but yet he said the first lesson of economics is that these commodities are scarce. Everybody can’t have everything. There is a limit. The first lesson of politics is to ignore the first lesson of economics. This is what the politicians do.

Bill: Is that what created the housing bubble? Think about the housing bubble – not everyone can afford to own their own house. When I was young, I couldn’t afford to own my house. But someone said “we want to mess … get the alchemy kit out and we want everybody to own a house, especially certain ethnic groups, to own homes. So we’re going to do whatever we can to mix this magic potion up.” And as it turns out, guys, it ends up hurting those people because of what Greg’s been talking about – the misallocation of resources. It hurts the very people that it was designed to help. That’s the tragedy behind this whole thing. Not only is it a lie to the taxpayers, but it’s a lie to those people that got into a house with nothing down, more than just a piece of paper and now can’t afford it. So they have to go through the tragedy of moving out because of these economic rules. Because of the misallocation of resources.

Greg: Absolutely. Couldn’t say it any better than that, Bill.

Bill: So where are we with QE1 – I imagine the rage at the conferences, what’s going to happen with QE2. If we get to QE2, people are probably already talking about $50 and $60 silver. I’ll bet you’re hearing some pretty crazy things there at the conference.

Greg: Yeah. And just to define this a little bit, you have a lot of guys like me that spoke at this conference and you have … we’re divided in to two camps – you have the guys that are basically deflationists, and then you have the guys that believe in the inflationary scenario. I’ve been saying in the newsletter the last few years that the Fed has been walking a tightrope and it’s like there are these giant sucking forces trying to pull you off the tightrope on each side. One is called inflation, one is called deflation. The Fed has been walking the tightrope and able to somehow stay on the tightrope but now they’re running out of room. They’ve gotten to the end and there’s nowhere for them to go. Some people still believe that it’s going to go the deflationary route, where there’s just a total collapse of the financial world. That would be the worst case scenario. That means that prices of things collapse and society – that would be the ultimate depression. We hope that doesn’t happen. I’m more in the camp now where – as I’ve said, I didn’t know which way this was going to go, it could have gone either way. Now it appears, because of QE1/QE2 and all this other money that the public doesn’t even know about that’s been created or loaned or guaranteed, in the trillions and trillions of dollars in the last two years – this is total insanity. There’s total craziness that’s going on. Of course it’s not sustainable but what it helps you understand is that we are now, I think, the forces of inflation are going to win out here. I think we’re already starting to see it. As oil prices are rising, it’s causing food prices to rise and here in America it affects us – for most of us it’s an inconvenience. We don’t like seeing it. To fixed income people it’s a disaster. To other peoples around the world who are just trying to buy their beans and rice, it has a huge effect, and this is why you’re starting to see the civil unrest, because these people can’t even get their food. In Libya and Tunisia and Arab-world countries, these people live on the edge, and when food prices become tight or supplies are tight and prices soar, it puts them in the situation where they’re not eating. This is where the civil unrest really starts to unfold. You see any kind of societal situation – society is really a fine line, as I’ve seen in my life as I travel all around the world, between civil and uncivil. I can tell you that if people don’t eat for three days, normally rational, law-abiding citizens suddenly start doing very stupid things when they haven’t eaten for three days. This is how tenuous society is and we’re seeing it worldwide right now. All this money that’s being created, I think, is going to cause hyperinflation, not just inflation but hyperinflation. If you notice, a lot of the goods in the stores now – the boxes are getting smaller even though the price stays the same. They could raise the price but from a consumer perception it’s better to keep the price the same and make the box a little bit smaller. The orange juice containers that were normally half a gallon, I know in the cities – not out in the country yet, but in the cities, I’ve seen this start already – the orange juice containers are getting a little smaller but the price remains the same. I was at Costco right before I came up here. My kids like the Famous Amos chocolate cookies and the box is getting smaller even though the price is the same. I think we’re going to see the forces of inflation really starting to wreak havoc in our society. Higher oil prices is going to cause a good chunk of that but then all this funny money that’s being pumped into the system – it usually takes six to nine to 12 months before it circulates through the economy. Depending on how quickly that money starts changing hands, they call that the velocity of money. If the velocity of the money isn’t changing hands very quickly, in other words people are holding on to the money because they still think it has value, then the inflation will take a little longer to show up. If suddenly people get fearful though, and the velocity of that money starts to change hands very quickly, then the inflation can show up with a vengeance very fast. This is what I’m worried about. I think in the next six to nine months, we are going to find out that the forces of inflation have won out and the Fed would prefer to see inflation rather than deflation. As ‘Helicopter Ben’ – as we describe him – Ben Bernanke says he’s willing to drop money from helicopters if he has to, to avoid a deflationary collapse. We know that the Feds are hell-bent on creating whatever amount of money it takes to be pumped into the system. But again, this is all part of the fraud of Fiat currency money and the end game of what happens when Fiat currency disasters finally implode and return the paper money to its intrinsic value, which is zero.

Brian: Greg, we’re going to run to a quick commercial break. Maybe when we come back you and Bill can discuss what we can do with this now, because you’ve got me drinking the Kool-Aid and now that other people are listening and believe it, we’d like to know what we can do now that we know what you and Bill know. Ladies and gentlemen, we’re going to run to a quick commercial break. We’ll be right back to Off the Grid News – the radio version of

[0:40:09 – 0:44:22 break]

Brian: Ladies and gentlemen, welcome back to Off the Grid Radio – the radio version of Bill, you know what always happens when we have a guest for an hour and what they can teach us is so gripping and so compelling that the hour flies by. That is most certainly the case this morning with Greg McCoach. He’s here with us. This is our final segment. Bill, I know you had a couple of questions for him so I’m going to toss it right to you.

Bill: Thanks Brian. Greg, here we are in our last section. As Brian said, we could talk to you for hours and hours. I’ve been impressed at silver’s run recently. Silver has some interesting dynamics. It sits there in the periodic table between gold and copper. I think we should talk a little bit about why silver is such an interesting metal and then maybe what are some of the drivers. We were talking about what are the precious metals’ drivers, what are the macro things. But inside the silver market itself, what’s driving that and what should people do to take cover as it were?

Greg: Precious metals are definitely a place where people need to be. What investors need to understand is that owning the physical precious metals and taking delivery of them is very important in this environment. History proves it over and over and over again. My grandmother, I won’t go through the whole story, I interviewed her when I was a young man. She told me during the Great Depression the people who did the best were the ones that didn’t have any debt, or had a house paid off or had a car paid off, but not debt, and the people who had precious metal coins. She remembers people selling their houses for a handful of gold coins. That’s really what led me – that interview and that particular comment is what started my fascination with the precious metals. I wanted to find out why that was the case. Silver in particular – silver is referred to oftentimes as ‘poor man’s gold.’ Gold always gets the attention first from these economic distortions because the big money uses it as the safe haven place to hold some money until they can see if the smoke’s going to clear or not. So we’ve seen this constant moving back and forth safe haven, out of safe haven, back to safe haven, over the last 10 years. But it’s driven the price of gold to new all-time highs. We just hit another one here, I think it was last week or yesterday. I’m here at the show, I haven’t been following it here the last few days like I normally do. We’re hitting a new high. Now silver is hitting new 30-year highs but we haven’t yet crossed the 1980 nominal high of $55 an ounce that silver hit back then. Gold crossed its old nominal high – that 1980 nominal high $875 several years ago. Silver still is playing catch-up and this typical with these secular bull markets that we see in the precious metals. The secular bull market is usually very long term. Gold runs first, silver starts to play catch-up. As we get to the latter stages, or the middle to latter stages, and that’s where we are right now. Silver’s starting to catch up. Why is that? Why do I think silver is such a great opportunity now? Well, let’s look at silver. In the entire history of mankind that we can record, it looks like 46 billion – billion with a ‘b’ as in boy – ounces of silver have been produced. Unfortunately, silver is not recycled in many cases and silver is used up in the industrial processes that it’s used for. So over time, silver gets used up. It used to be that the United States kept a 2 billion ounce strategic supply of silver after World War II but that’s now gone. That was depleted about five, six, seven years ago. Now, the total amount of silver that analysts like Ted Butler, who I respect, who has a very good understanding of the silver market – he states and others state, and from my research I agree, I concur, that there’s only a billion ounces of physical silver available above ground in bullion coins and bars, jewelry, whatever form of silver that exists above ground, that’s all that exists. One billion ounces. Five hundred million of that, or half, 50 percent, of that billion ounces is controlled or owned or being stored in the seven largest bullion funds in the world including Central Fund of Canada – a bullion depository that buys physical gold and silver and stores it in Canada. They own half of the one billion ounces. The other thing that’s really … gives you good insight into this market is that JP Morgan Chase and their cronies, they’ve been shorting silver on the COMEX to a massive degree. We know with these rising prices they’re taking horrendous losses right now. Sooner or later they’re going to have to cover, and when they have to cover, that means they’re going to have to go into the physical market to get this metal. That represents right now 386 million ounces of silver, physical silver. We already know there’s only a billion ounces that exist. Half of it’s already tied up with the big funds, the seven largest funds in the world. 386 million ounces – if they have to go onto the open market to compete with us as investors who are trying to own the other half of this billion ounces, there is nowhere but higher prices in store. Not just higher but much, much higher. I conservatively say silver’s going to be $50 to $60 an ounce this year. This year. That’s if nothing happens; that’s if everything is able to stay intact. If we have any kind of major implosion or JP Morgan Chase has to rush in and buy up all this silver, we could go over $100 an ounce in the blink of an eye. Obviously I think there’s – as much as I like gold, the opportunities in silver are even better. Owning the physical metal is part of a prudent portfolio. How much is up to you, but a five percent allocation of your total liquid net worth in the physical metals is a total no-brainer, in my opinion. I have up to 25 percent of my liquid net worth – I consider that money, all my assets that I can turn within two weeks into cash. I don’t consider my house as part of my liquid net worth. I keep 25 percent of my liquid net worth in physical metals. I take delivery of it. I don’t want anybody else holding it for me because history has shown when these economic distortions and problems occur, if you don’t have physical possession of the metal, you don’t benefit from the higher prices. Why? Because most of these certificate, pooled accounts, ETF accounts are basically fraudulent. In other words, you send them money and they say they have all this physical gold and silver behind it, but in reality they only have to keep, by law, one to two percent of the actual monies they receive in actual physical metal, particularly with the pooled and certificate accounts. When those prices go up dramatically, they’re not going to have the money in a vehicle that’s made that much money so you’re not going to get the benefit of it. Proof of that, we saw back in 2008 – I’ve said the Perth Mint, which they touted as a great thing – it’s backed by the Western Australian government. I say phooey. I say that’s a fraud. I’ve been saying that for 10 years and we found out in 2008 that I was right, because people who tried to cash in during that time found out that they didn’t have the physical gold to back it up. That’s just a case in point, modern day of actually this example. You don’t want anything to do with those things. You have to take the physical possession of the metal. Just like my grandmother said, those people who had the physical gold and silver in their possession made the rules. People were desperate to have gold and silver. They sold their houses for a handful of gold coins. This will happen again. It will happen again. There’s no way around these problems. We have to go through the consequence phase. If we learn our lessons and we keep the politicians accountable by going back to a gold standard, getting away from Keynesian economics, getting away from Central Bank thinking and get back to our Constitutional liberties and freedoms that generated all this prosperity and blessings to begin with, then yeah, if we do those things then we can get back to another golden age where society can prosper. We can all be on a good note. We’ve got the technology of nanotechnology in our future that can bring amazing changes for the good. But people are going to have to learn their lesson. The world has to go through the consequence phase because I don’t see any other way that people are going to get this. It’s still such a small group of people that understand the things that we’re talking about here. But when they lose their money, when they lose their houses, when their bank accounts show the money is still in the account but it can’t purchase a fraction of what it used to purchase, they are going to be angry and they’re going to want answers. They’re going to find out about the things we’re talking about and then, and only then, do I think real changes can take place. That’s not going to happen overnight. That may take years for this process to move through before we can get back to true liberty and freedom. What is it going to entail during the interim? This is why I talk about get a safe haven place. What good’s your money going to do you if you don’t have some food storage, if you don’t have a place to hang out that’s safe, far away from a big city where most of the big trouble’s going to be? On and on and on it goes.

Bill: Greg, I have a couple of quick ones. We’re starting to run out of time. Number one, let’s say JP Morgan wasn’t short-selling. Let’s say there wasn’t such a thing as fractional reserve ownership of the metals in some of these depositories. What would silver really be worth? You mentioned $100, but let’s pretend that the world – let’s pretend Von Mises was sitting next to you today, and he had his world where supply and demand equaled themselves and there wasn’t any government interference in this case, or fractionalism with respect even on the private side. What do you think silver would be? That’s my first question. What do you really think the price of silver would be?

Greg: I think silver, like I said, $55, $65 an ounce this year I think is a no-brainer. After that, once we get into the real crisis, hyperinflation hits and the dollar fails – the dollar is absolutely going to fail. I can’t tell you the exact timing on it. Is it three days from now, three weeks, three months, three years? I don’t know. But when it does fail, and it will, silver’s going to be priced at an insane amount of money. It’s going to be $400 – $500 an ounce, minimum. Minimum. How high it goes from there depends on how crazy things get. But I’m telling you, silver will be $400 – $500 an ounce before this is over, at a minimum level. It could go much higher. The other thing to think in terms of, whenever these secular bull markets happen, gold – how many ounces of silver it takes to buy one ounce of gold – that ratio is coming down dramatically. I’ve been talking about this in the newsletter for about a year-and-a-half. We were over 58-to-1. Now we’re down 38/39-to-1. Historically, it always goes back to 14/15-to-1. In this case, because of the dynamics are so different from the other times of period that we can relate to and look at, I think silver’s going to go maybe 4-to-1, 3-to-1, 5-to-1 to gold. That means that if gold is at $6000/$7000/$8000 an ounce, heck, silver could be $800/$900/$1000/$1200/$1500 an ounce. This is why I’m saying there’s such an exceptional opportunity just in owning physical silver. Then you look at the leverage that you can get with these silver mining stocks …

Bill: OK, that’s my next question. Let’s delve into that, Greg. Let me tee it up for you. What I see is, silver – and I think most people don’t realize that silver – very rarely is silver mined in and of itself. Now you can give examples of some pure silver plays, but most silver – and this is another limitation on silver, to validate what Greg’s saying – it limits the supply. Silver’s found as a byproduct of mining gold and lead and zinc and other things. If you, for example, took mines that were just mining silver, how many straight plays are there out there?

Greg: Well, there’s not many. I’ve been scouring … I’m up here. I’m looking at new silver deals. I’m already involved with a lot of good plays that I think are going to do phenomenally well. They’re performing well to some degrees; in some cases they’re having a few issues. Overall, they’re going to do very well in the coming years. I’m looking for some ground floor opportunities right now where we can get people in. These silver things – you can buy these things for sometimes pennies – pennies – 20 cents, 50 cents, 60 cents, 80 cents – under a dollar. I think the leverage that we can get with the  mining silver market and an exploration story that finds a big discovery – on the mining stocks, we make our big gains on a big discovery run-up or as we go into production. Those are the two times during the life cycle of a mining share where investors make their big money. I just see tremendous opportunity. The sky is the limit. This is a once in a lifetime opportunity. You’ll never see anything like this again in your lifetime. This is the time to do it. Just owning the physical silver, physical gold – find the quality, junior mining stocks in the precious metals – you’ll do phenomenal.

Bill: So Greg, lastly – and then Brian, we can close her down – what issue are you going to start – you’re going to be making some deals, talking to folks, maybe visiting some mines in the next little bit of time – what issue of the Mining Speculator are you going to be revealing some of these new plays at?

Greg: In the next few months, obviously. I’m a guy that goes out. I’m not paid to make any recommendations. This is all done on my own merit. I go out, I look at these things. If I like them I put them in the newsletter; if I don’t like them, of course, they go through a filter system – a process of – I meet the people, I get the story, I start doing my research. I do the site visit. If everything checks out, then and only then do I recommend them. There’s a lot of garbage out there. There’s a lot of companies that aren’t worth putting any money on, even though they have pretty brochures and people that talk – very sales-oriented. They have a good spiel, but ultimately we don’t want to touch them with a 10-foot pole. I’m trying to bring to my subscribers, the Mining Speculator, I’m sifting through all this garbage for them and trying to present them with the best of the best companies. That doesn’t mean they’re all going to make money for us. We know that if you invest in 10 of these things, we know that we’ll lose money on one or two of them. We’ll have a couple that go nowhere. We’ll have a couple that make us 200, 300, 400 percent. But we also will have one or two of them that go 10X or better. That’s where you make your big money. If you play that … my focus, what I do for my subscribers, is go do the ground floor research for you, present you with companies that are quality. They’re not a scam. They’re not a pump and dump. They’re real. They’re going to put the money into the ground, whether they find anything or not, or whether they can put it into production or not, that’s left to be seen. We know if we invest in groups of things – never put all your money in just one stock – put it over a group of them, the best ones you can find. Typically you’ll do very well over time. 11 years of doing this now, I started doing the newsletter June of 2000 – we’ve had good years, bad years, but we’ve overall, I would say, my long-term subscribers are very, very happy with what’s happened over the long term.

Bill: These, Greg, as you said – I believe myself – opportunities of a lifetime. You might see it once a generation. You and I saw it the last time in the 1980s when silver and gold ran up. And you’re going to see it again, only this time, as Greg’s saying, in a much more profound way.

Greg: Absolutely.

Brian: Ladies and gentlemen, unfortunately we are out of time. Greg, thank you so much. I know you want to get back to everything going on at the PDAC. Before we let Greg go, I want to mention once again the Also, you’ll be able to get a link on Facebook. That’s about all the time we have. As always, thank you for listening to Off the Grid Radio. Be sure to email us with questions, comments, critiques at [email protected]. You can find us on Facebook, as always, at offthegridnews and follow us on Twitter @offgridnews. On behalf of everyone here at the team, thank you so much for giving us an hour of your time. Until next time,

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