The Reasons All Americans Need Gold and Silver
JH: What do feel is the likelihood a President Trump could take America to war with a Middle Eastern country, Russia or China?
DM: Well Russia or China, I think not. I think that that could go nuclear so easily that no one is going to mess around with that, but I do believe there may be some military action with China especially in the South China Sea, but not a full scale war. The Middle East, you never know. The problem is you don’t seek a war, but they knock down the World Trade Center and you don’t have any choice. From an individual investors point of view, that generates the uncertainty in the economy. You never know when you’re going to hit a depression because of a war like after 9/11. You never know when you’re going to
hit a period of crazy inflation after war like after the Viet Nam war. War is not controllable. You can’t budget them, you can’t plan them. There’s another side in them. You don’t know if you’re winning or losing or what’s necessary. Therefore, I think it’s another reason to have gold. We’ve never really survived a war economically without price controls, which we had in WWI and WWII. In Viet Nam we didn’t, and we paid for it with fifteen years of lousy economic growth. I think that the possibility of a war is one of the big variables that frankly induces me to keep a portion of my assets in precious metals. JH: Does America have the political will for another war? What about the financial will, but you pretty much answered that?
DH: I don’t think America ever wills a war. It’s forced on us, and I do believe that Americans will be much more leery about going abroad as John Quincy Adams said “in search of dragons to destroy”. I think they will be much more of a sense of being conservative about deploying our forces. The mood is not for nation building like it was in 2004, but still wars get forced upon you, and when they do America always has the will to go ahead and win.
JH: Many analysts see Trump fulfilling his campaign to, “Make America Great Again,”. While theterm is a relative one, what would it take to make America work again and can it get done?
DM: I think the major thing is to unleash the money that is currently hidden in our economy. You have, the money supply in the United States has increased from 800 million dollars, when Obama took office, to over four trillion dollars today. So naturally we’re floating in money. Naturally the economy is booming, naturally there is no unemployment, naturally everybody’s buying a car and home, that’s not happening? Why not? Because everyone is scared to death to spend the money that’s out there. OMG, I’m in the healthcare industry, are they going to change all the rules and regulations, how can I invest here? OMG, I’m in the manufacturing industry and I’m automating my plant. The price of electricity can go crazy cause they’re going to close all the coal burning plants down. I’m in the service sectors, they’re going to force me to unionize. What’s that going to do to my economic situation? Everybody is paralyzed by these fears. When Trump turns those off and says that’s not going to happen, the money comes out of hiding and at that point we get the bang that we should have gotten for all the money Barack Obama printed. We’re going to get that bang under Donald Trump. The problem is the bang may be too loud and cause inflation. Whether it’s bad times or good times, you need precious metals.
JH: Now we’ll turn it financial. Every informed investor knows the U.S. is nearly 20 trillion in debt, about sixty-two thousand per citizen. Is there a political plan to get this reduced over the next four years. Does the will exist to see this happen?
DM: When I worked for President Clinton to balance the budget, it was the only time since Eisenhower we were able to do that. In ’95, ’96, ’97, ’98 and ’99, we eliminated the federal deficit. In fact back then everyone was saying there’s no federal borrowing, so we don’t have T-bills to use as security. We have no secure investments left like that, no baseline. Well, what, we didn’t do it by cutting. We did it by economic growth. Clinton basically told the Federal Reserve Board with new computers and the internet, productivity was rising and you didn’t have to worry about inflation. You could peg the economy to grow at 4 not 2.5 and that would solve all problems. The deficit went away like that. We were in the process of literally paying off the national debt when 9/11 hit and through everything into a (inaudible) And I think that will be the situation now.
JH: Americans need to get back to work, we believe it’s not the government’s job to create employment, but rather remove barriers to the private sector’s ability to do this. Will America can get back to work?
DM: Oh, yes. You’re going to have very significant increases in employment and increases in average wages because I think the Trump administration is going to be very focused on wages of the average American which is a reversal for a Republican president. Usually, they are just concerned with profits, but this administration that got most of its votes, but carried blue collared people voted for Trump. College educated voted for Hillary, the rich people voted Democrat, the poor people voted Republican and you’re going to see a focus on downscale increases in wages. I think that’s going to be a more optimistic picture. The serious threat over the four year period is inflation and recession. Which is why you really need precious metals.
JH: What are your thoughts on the global push to get reduce large denomination currency in places like India, Europe and even the U.S.
DM: I think there’s a large global push to replace the dollar as the world’s reserve currency. It was chosen as the reserve currency in 1945 at Bretton Woods in New Hampshire at an enormous economic post-war conference that set up the IMF and the World Bank and the dollar as the reserve currency. It worked until Nixon took us off the gold standard in 1973. That gave politicians the license to print as much money as they wanted. No one has abused that power than the United States. Other countries are inhibited because they have to take their newly printed money and change it into dollars and hope that someone honors it. In the U.S. we skip that middle step because we are the dollars. I think that is going to be increasingly unacceptable to the rest of the world. The problem is what do you replace it with. The pound is too limited. The euro is in worse shape than the dollar because of southern Europe and China doesn’t want its currency, the yuan, to be worth anything because then its products would be too expensive abroad so it could be stable but it holds it down. The yen is a basket case, so what are you going to use? Speaking of basket cases, the countries decided to have what they call a market basket of currency. All of them together and they average out to SDRs, special drawing rights which replaces the dollar. The problem is that SDR can’t raise taxes. The IMF doesn’t have a tax base, it’s dependent on the nation state for having that. Then you have a currency with nothing behind it. That’s not going to work. So it’s going to be the dollar, but I believe increasingly, more and more and more the world is going to have to shift to gold, because of the irresponsibility of politicians around the world, including the United States in their printing of money. I think investors are going to increasingly demand gold, merchant bankers are. Eventually, the gold standard may come back as a currency peg for the rest of the world.
JH: In fact, Donald Trump is an advocate for a gold standard is he not?
DM: Yes, he said that. The issue of course is how do you do it? Unless you peg these currencies to something it’s just not going to work. For example, you remember the history of OPEC, oil prices. They were pretty stable until 1973, then they started going crazy. Huge increases, huge oil spikes, huge crashes ,huge increases, huge volatility when it had been absolutely solid. What happened in ’73, Nixon took the country off the gold standard, took the world off the gold standard. If you measure the price of gold, of oil in terms of gold and silver, the price is the same as it was in 1946. If you took the amount of silver that was contained in two dimes in 1946, twenty cents, that is the current cost of a gallon of gas. In ’46, you could get a gallon of gas for that. At every point in the process, and all OPEC is trying to do is catch up to the wild fluctuations of the printed currency. I think eventually peopkle will understand that is ruining the global economy. Increasingly, making it impossible for it to grow and that you need to return to a precious metals based currency.
JH: Let’s discuss the U.S. dollar. Since 1913, we’ve been seeing the buying power of the U.S. shrink nearly 94% according to the Bureau of Labor and Statistics, what are your thoughts on reversing this trend?
DM: The dollar did not lose a lot of its value prior to 1973. The huge losses were after ’73. Except for some right after WWII when there was too much buying power. I think the entire focus of the Trump Administration will be on Maintaining that value and maintaining that ability. People have caught onto the fraud that, your wages go up and up and the value goes up and up and the currency gets worth less and less and in fact you’re back where you started from. It feels better. They’re understanding that shell game, and they’re demanding increasingly that people use gold. The gold supply has been fairly constant. It’s ample and if you peg currency to gold, you have a way to stop politicians from just running the printing press. It will be a while before the country gets the point, but individuals can get the point and put their own assets into gold. As I have much of mine, before that happens throughout the world.
JH: You answered a question here, and I’ll jump ahead. We know you want to be an owner of gold and silver, a simple question, why?
DM: You need to diversify your investment portfolio so it doesn’t matter what happens with the economy you’re in good shape. If you think there is any significant risk of a market crash or any significant risk of run away inflation and there is in fact a significant risk of both, you should have your part of your money in gold. You won’t have to sweat that. It will sit right there and maintain its value. A barrel of oil costs the same in gold now that it did in 1946.
JH: So the two primary concerns are runaway inflation you would say, and the other is stock market crash. Perilously close after eight years of this administration. The New York Federal Reserve issued a report if not for the stimulus money by the Feds and the artificially suppressed interest rates, the Dow and S&P should be 50% lower. When your body is sick you run a fever, your body raises your body temperature to kill the germs inside of you. Now when the economy hits a recession, the economy gets the equivalent of a fever. People can’t afford the current high prices, so prices drop and drop until people can afford them. Employers can’t afford to pay the high level of wages so they drop and drop
and drop until they reach a level they can afford and once they’re at a level they can afford and all the waste and administrative excess is bleached out of it then you can grow and really do well. Every time the economy has begun to fall, every time it gets too big and it bursts the Fed was right there with a truckload of aspirin, printing money They would print so much money and flood Wall Street with so much money that nothing could crash. It all stayed up there buoyed by this artificial money. The economy wanted to crash. It needed to crash. It needed to get rid of that excess, but the Fed wouldn’t let it. Now the Fed can no longer do quantitative easing. They can no longer print the money. Why? Because their balance sheets can no longer sustain it. They can’t do it even if they wanted to do it and now if there’s a crash, there’s going to be a crash because there will be nobody there artificially pushing it up. That’s why in this period when there is a severe risk of a crash, you need to protect yourself.
JH: With your political analysis and multiple states across the country authorizing gold and silver as legal currency, what are you telling your followers about gold and silver.
DM: I’m not in the business of advising people on investments. I don’t give people advice. All I can do is share the fact that I invest in it. I think that’s pretty important for me, so obviously I would recommend it to other people.
JH: With the various political challenges the country faces, what role, if any, do you think Americans should assign to gold and silver ownership?
DM: I think at the moment every American should have a significant portion of their portfolio in gold and silver. Sometimes those can be affected by other developments, a shortage in production or an increase in production. You don’t want everything to be in that, but you want a lot of it to be in that. We have to realize in the current environment, not losing money is pretty damn good. Zero looks pretty friendly and to protect yourself and keep yourself at least at zero in terms of investments while the economy is recovering gold and silver are pretty good for that. In terms of public policy, I think that America has got to move away from the printing press. We simply can not trust the politicians to print money because they’ll print it and print it and print and flood the market with it and then they’ll move growth up half a point and it should be ten points with the amount of money they’re producing. All that
money will be out there and nobody will spend it, things will stabilize, then when they get good everyone will spend it and there will be mega runaway inflation which I think is a serious danger.
JH: As a hedge against runaway inflation, being perilously close to a stock market collapse, the international war on cash, the European banking system, you mentioned the southern states throughout the EU, Portugal, Spain, Italy, your advice would be absolutely, or what you do is take up a significant percentage of your portfolio to the preservation gold and silver.
DM: There’s another really important reason to to invest in precious metals. The currency will not survive another market crash. If the banks crash like they did in 2007 and 2008, like they did in 1981 & ’85, the S&L crisis, the government is not going to do what it did then. It can’t do it, which is rush in and assume the debt from the government. Pay it down, stabilize it and turn it back over to the banks because its grown to big, too large. There’s too much money out there. The government can’t do it. All of the central banks in the world combined can’t do it. The IMF recently recognized it when the banks in Cyprus failed because Greece went to hell. When those banks failed the IMF said we’re not bailing those banks out. What we’re going to do is make them take a haircut, really a scalping. What they did is tell every single person that had money in that bank, you’re going to lose 20% of your deposits. Not
of your investments, not the equity investment you made in bank stock, but of the cash you put in their from your paycheck, 20% off the top gone and that’s how we’ll bail out your bank. That’s the precedent
for what’s going to happen in the United States if banks fail. Depositors, you and me are going to be socked with a tremendous hit. Legislation already passed Congress said if pensions default and the pension guarantee fund is inadequate to pay for those pensions and has a very low balance, that the government will invade the principal of the pension and take money away that is currently going to pensioners and use it to bail out the pension fund. It’s a small step from that to depositors losing their money in the bank. So the phrase, safe as money in the bank has become ludicrous. This is what’s safe (holds up a gold coin).
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