[00:03:47] Dana Samuelson: They’re all pieces of history. Some are extremely rare, only a few known. There were other coins that were made as currency that never got spent as money back in the twenties and thirties that survive in quantities of, you know, thousands and hundreds of thousands today. So there are all kinds of degrees of rarity, and we measure that by how many were made at the time, but more importantly, how many survived today?

[00:04:17] Dana Samuelson: Then of the known survivors, there are different qualities. Some coins got used and have much lower quality ratings today than coins that basically look like the mint just made ’em yesterday, even though they might have been made 150 years ago. So there’s survivability and rarity, and then there’s quality rarity.

[00:04:38] Rebecca Hotsko: That’s really interesting. And so is this more of a collector’s item or do investors buy them and then hope to sell them high or later? How is that process. 

[00:04:50] Dana Samuelson: Well, it’s both. It’s both. There are a lot of collectors for us coins and there are people that are usually more on a budget, but there are extremely wealthy people who have collected rare coins as well.

[00:05:01] Dana Samuelson: And I can give you a couple of examples. So I started in 1980, so this is actually the beginning of my 43rd year in the business. I worked for a company in 1982 where my boss was one of the leading numismatists, which is just a word for coin. On the day back then, he’s not in business anymore, but he bought at auction in 1982, an 1804 Silver dollar, and he paid $250,000 for that coin in 1982.

[00:05:31] Dana Samuelson: It’s one of 14 known to exist. And it’s kind of a special one because one of the people that owned it back in the early 19 hundreds, put a little d he stamped a little D for his name Dexter. So the coin is known as the Dexter Beford specimen, and we’ve known where, who’s owned it for the last 150 years.

[00:05:49] Dana Samuelson: Well, that coin sold at auction in 2017 for 3,290,000. So over 40 years, it went up over 3 million in value from 250,000. So that’s one example of a rare coin, and I held that coin in my hand when we bought it in 1982. So this is a unique piece of history. Another interesting coin is a 1933 $20 St. Gaudens.

[00:06:15] Dana Samuelson: There were 445,000 of these made in 1933, but they never left the Philadelphia Mint. And then President Roosevelt recalled the gold in 1933, so they were all melted. But a couple years later, individual pieces started to pop up on the individual on the wholesale market and we’re trading dealer to dealer ro to collectors.

[00:06:37] Dana Samuelson: And it turns out that someone had gone down to the mint and swapped out 20 current older coins for these 1933 s with somebody at the teller window. So when they melted those coins into bars, which were in Fort Kns today, those same ounces, only in bar form, had the right amount of ounces. So a secret service agent decided to make a name for himself, like J Edgar Hoover was making a name for himself back in the.

[00:07:01] Dana Samuelson: And he started to confiscate these coins so they became illegal to own. Well, King Faruk of Egypt bought one of these coins from the most prominent new Sist of the time, Max Mill, and sold it to King Faruq. A dealer in London bought this coin when King Farouk’s Estate came to auction in 1999 or 2000 for million dollars, and the coin was going to get sold under the table, black market at a New York show, and it got confiscated by the Secret Service.

[00:07:27] Dana Samuelson: Well, because it went by diplomatic pouch from the US Mint to King Farook. He won it authenticated before he actually bought it. It was deemed legal to own that coin. Sold for 7 million. In 2002, it came up for auction for only the second time ever. And it’s the only 1933 $20 gold piece that’s legal to own.

[00:07:47] Dana Samuelson: And it just sold for almost 19,000,002 years. 

[00:07:51] Rebecca Hotsko: That’s so interesting to learn about because it ties back to, I guess, history and then scarcity, supply and demand. But in general [00:08:00] then, is that really what drives the price up? Because I’m assuming that’s not the case for every single coin. So then what is kind of driving their value upward?

[00:08:08] Rebecca Hotsko: It’s just someone else who wants to buy it. They think it’s really worth more than you bought it for in the past. 

[00:08:15] Dana Samuelson: Right. So these are pieces of history, true pieces of American history, and what I’ve given you are two of the most rare examples of coins that there are. So you have to think of it this way. The number of survivors is fixed, and is actually decreasing through attrition.

[00:08:30] Dana Samuelson: The more common coins that survive today in quantities of, you know, 50,000 and a hundred thousand or more, there’s some attrition there because they get put in jewelry. Beat up a little bit through handling. Not everything survives, but the available pool of buyers keeps getting bigger every year as the population keeps growing.

[00:08:46] Dana Samuelson: And then we go through phases where coins are in vogue or maybe coins are not in vogue. Now there we had a, we had much lower sales overall, 20 16, 20 17, 20 18 when the economy was good, we had a pro business president in the white. Donald Trump. And then Covid hit and we went through a second wave of really deficit spending where our debt exploded for the second time in 20 years.

[00:09:09] Dana Samuelson: And suddenly the rare coin market got on fire in 2021, where wealthy individuals were concerned about really preserving their wealth or having true private transportable wealth. And today, coins are certified by independent grading services. This is a coin, I know your listeners can’t see it, but this is a certified coin from a professional coin grading service, and this box holds 20.

[00:09:32] Dana Samuelson: But you could literally hold $50,000, a hundred thousand dollars, 10 million worth of rare coins in this little box carried easily and transported. And we’ve had some very, very wealthy individuals come into the coin market and try to establish first, you know, world-class collections and everyday collectors ramping up their appetite for rare coins as well.

[00:09:51] Dana Samuelson: So it’s a completely supply and demand driven market. Prices can wax and wane, but usually over time they do quite well because of their limited availability in a growing pool of fires, 

[00:10:03] Rebecca Hotsko: I was thinking, as you said, 2021, demand skyrocketed. There was also so much liquidity pumped into markets, and so how is the market then this year when we’re seeing that liquidity kind of dry up a little?

[00:10:17] Dana Samuelson: Things are a little bit slower right now, but that’s, and inflation’s really undercutting the middle class and the lower class. So, you know, the wealthy, the top half of the country is still doing fairly well despite inflation’s rearing its ugly head. But, definitely the middle class is being undercut.

[00:10:34] Dana Samuelson: Now, one thing I can say is when Bitcoin went from about 15,000 to 60,000, that created a pretty big wealth effect, and that helped to fuel some of the rare coin buying that we saw. I mean, the rare watch market surged as well, and so did rare cars, so that really boosted all of those markets. Now, the big Bitcoin correction has undermined that to a degree.

[00:10:54] Rebecca Hotsko: Yeah, that definitely makes a lot of sense. Okay, I want to get into kind of our main topic for today because I know we have a ton to talk about on this. And so you talked a little bit about the history of gold there and coins. And I want to start with you on the history of gold because I really wanted to have you on to just help us understand gold’s role today in our economy as there’s been some talk about countries deed dollarizing.

[00:11:18] Rebecca Hotsko: Buying oil in gold instead of the US dollar. So there’s been different periods over time where gold has just had these different roles in the economy, our payment system and the monetary system. And so I guess just to really help us understand what could happen in these events, I thought it’d be helpful to look at Gold’s History in these different regimes.

[00:11:37] Rebecca Hotsko: And so I was wondering if you could start out by talking a little bit about the history of gold and how its role in the economy has changed over time. 

[00:11:47] Dana Samuelson: Well, going way back to ancient times, gold and silver have been both money and currency. Now they’re not the same thing. Money is something that has value.

[00:11:57] Dana Samuelson: Currency is a medium of exchange. The gold has always had an allure because of a couple things. Number one, it’s hard to find. Number two, it has a great yellow color. It’s impervious and it’s malle. So it’s hard, I mean, if you go to King Tut, his burial mask was gold and it weighed 22 pounds. So that’s, I mean, the ancient Egyptians valued gold and gold has been currency and money around the world all the way until the 1930s when the US got into economic trouble because of the Wall Street crash in 1929.

[00:12:32] Dana Samuelson: And then the depression. So gold was money and currency worldwide. Every country in the world basically had gold as money until we went off the gold standard as currency. In 1933 when President Roosevelt called in the gold in the US and made gold illegal to own. Now other countries continued to have gold as currency for a couple of years, and then World War II started and that pretty much ended gold as currency in the world.

[00:12:59] Dana Samuelson: When World War II was over, the US had 20,000 tons of gold in Fort Knox, and most of that was those old coins that got melted into bars back in the day. So the US ended up becoming the world’s reserve. The dollar became the world’s reserve currency because we had the most gold, and our economy was not impacted by war like Japan and Europe was.

[00:13:21] Dana Samuelson: So the dollar became the world’s reserve currency backed by gold. We would never print more dollars than we had ounces of gold in Fort. And that lasted until 1971 when Richard Nixon was forced to dig gold in the dollar because we were spending more money than we had gold ounces in Fort Knox. And that’s when gold, the gold price became free floating.

[00:13:46] Dana Samuelson: For the first time in open markets. Now let me backup a little bit. Gold was fixed and priced at $20 and 69 cents announced from 1850 internationally to 1935 when Roosevelt recalled the gold, it was repriced at  $35 ounce in 1935, which is what the dollar was pegged at until 1968. That peg and jumped up to $38 an ounce.

[00:14:08] Dana Samuelson: Then it got to $41 an. And then Nixon had to take us off the gold peg. So now we have fiat currency for the first time. That’s not backed by anything but the full faith and credit of whichever country is issuing that currency. And of course, politicians like to spend money. And over the last, you know, 50, 60 years, we’ve seen 50 years, we’ve seen them do so with abandon in a couple phases now where our debt has just surged dramatically.

[00:14:34] Dana Samuelson: You know, our national debt was 5 trillion in 1995. It took us 200 years to get to 5 trillion. Now it’s 2023. It’s less than 30 years later, and our debts are six times that at 31 trillion right now. So it’s debasing the purchasing power of the dollar and gold and silver 10 to hold their purchasing power over time, which is why the gold price is not $40.

[00:14:59] Dana Samuelson: It’s not $400, it’s $1,900 an ounce. Right now it’s about $1,870 an ounce. 

[00:15:06] Rebecca Hotsko: Yeah, let’s clear up some relationships between gold and inflation and money supply, because I think there’s some misconception that gold needs to keep up with inflation. But I guess how is the relationship between that versus money supply?

[00:15:22] Dana Samuelson: Well, it’s not money supply as much as it’s debt. If you follow the gold price and you follow our increase in debt, we have seen them track each other pretty directly correlated over time. But the gold price is lumpy. It’ll surge at times when there is worry and economic trouble. And then when we have good economic times, it’ll sag and be complacent.

[00:15:46] Dana Samuelson: And then when we have more worries will rise again. So for example, gold in the seventies when we had a high inflationary period, gold went from $40 an ounce to 200 in 1975 on a big wave of inflation. The second wave of inflation we had back then. And then it fell to a hundred dollars when things got a little bit better after Nixon resigned and there’s less of a crisis of competence in the us.

[00:16:08] Dana Samuelson: And during the second half of the seventies, it went from a hundred to $800 announced and that’s when we had a second, a third wave of inflation, because during the sixties and seventies we had three waves. We also had a second oil embargo, so we had an energy shock and we had hostages in Iran, which was a crisis of confidence in the US for most of my career.

[00:16:27] Dana Samuelson: From 1982 through 2005, the gold price moved between three and $500, announced us, and then we got into, we got attacked, we got into deficit spending gold, got over 500 to about $800 announced, tested the previous high, and then the great financial crisis came and gold took off. Went up to $1,900. It stayed up above $1,500 an ounce for a couple years.

[00:16:50] Dana Samuelson: We gained traction economically worldwide for the first time. 2013, 2014, gold corrected back down to about 11, $1,200 an ounce where it stayed until 2019 when it finally got over a hard ceiling at 1375 us and then we got in, then Covid hit and gold went for about $1,500 an ounce all the way to 2000 and.

[00:17:15] Dana Samuelson: So we’re in another phase right now where the gold price has made a big surge on the back of financial uncertainty and, and a big surge in debt. And we have inflation, which we haven’t had for 40 years. So we’re, we’re seeing inflation right now. Now this is gold has not been keeping pace with inflation in the US because the dollar has been so strong over the last year or.

[00:17:36] Dana Samuelson: And that’s primarily because interest rates will be better here in the US in 2022 than they were in other countries. So a lot of money from around the world came into the US for Safe haven and the gateway is the dollar, and that boosted the dollar way up and actually pushed gold down in dollars to a cyclical LO of about 1635.

[00:17:55] Dana Samuelson: Well, it was up in other currencies because they were losing value to them. Now we’ve seen some of that come back into parody over the last three or four months where the dollar has lost value relative to the Yen and the Euro, the British pound, because they’ve been, those central banks have been catching up with the US Central Bank and raising interest rates, which has helped to get things back closer to parody currency wise.

[00:18:19] Dana Samuelson: So the goal underperforming relative to the inflation surge in 2022 was more of a currency issue, a dollar value issue. Than anything else or an interest rate, differential issue. And that’s because our economy was better. People were looking for a safe haven here and our interest rates were higher. And that’s waning now.

[00:18:38] Rebecca Hotsko: Right? Okay. So a normal relationship between golden currencies is typically the US dollar and gold has a positive relationship because it’s denominated in U S D, but then for other currencies it’s typically negative. 

[00:18:53] Dana Samuelson: It’s the other way around. So the gold price in dollars is typically inverted. So if the dollars draw on the gold prices down and vice versa, and that’s because most of the gold in the world is priced in dollars, but most of the gold in the world is bought outside of the us.

[00:19:10] Dana Samuelson: So when the dollar gets strong, it makes gold more expensive. In other currencies, Asia consumes about twice as much gold as Europe does, and Europe consumes about twice as much gold annually as the US does. So these countries around the world have had currency crises where their currencies have failed, and the US has never, that’s never happened.

[00:19:32] Dana Samuelson: Yeah, so these countries, they like to have gold as hard money because they don’t always trust the financial stability of the government. And that’s why we have a negative correlation to the dollar with the gold price. 

[00:19:45] Rebecca Hotsko: Okay, that is super helpful. And then I guess just to hit it home then, so in the 1930s, gold price was fixed, but now that it’s not fixed, what are all the factors that really drive the gold price?

[00:19:59] Rebecca Hotsko: I know you named a few,  but let’s just make it clear. 

[00:20:02] Dana Samuelson: Well, first of all, there’s economic activity, so when economies are good, the gold price tends to be weak. More than not, it’s interest rates because when you’re getting a return on your money with interest rates at 5, 6, 7, 8%, gold doesn’t pay a dividend, and the cost of owning gold, it gets discounted relative to something that does pay a yield like an interest rate.

[00:20:25] Dana Samuelson: Now, when interest rates are zero, which they were for, you know, seven, eight years, Gold was more attractive to hold because there was no cost of ownership relative to other assets that would pay you a yield. Now, in an inflationary environment where yields are say 5%, but the inflation rate is 6%, you’re getting a negative real yield of 1%.

[00:20:46] Dana Samuelson: That makes gold attractive, even though interest rates have been going up. So right now, I mean, inflation’s been driving the bus for all markets for the last year or so. As you’re well aware with the guests you’ve had, And the feds reacting to inflation. Other current, other governments reacting to inflation, they’re raising the interest rates, so we’re anywhere real, kind of a choppy period.

[00:21:06] Dana Samuelson: Here we’re trying to see whether inflation is going to win out in the short term, whether interest rates, federal funds rates will help to dampen down demand. Which will tame inflation or whether we’re going to get into an inflationary phase here that’s more reinforcing itself to higher wages.

[00:21:22] Dana Samuelson: Higher rents. Now, when you pay somebody more money to get that employee, that’s the last thing you want to do is get rid of that employee, right? because you’re, you’re, you’re having to struggle to get ’em. But higher wages make inflation become entrenched. So we’ll see how this all pans out over the next three to six months, which is really, I think, the critical phase.

[00:21:40] Rebecca Hotsko: I think a lot of my guests that I’ve talked to were expecting the first half of the year to be quite brutal, and then perhaps the second of the half to recover. But it almost seems like sentiment around that is changing a bit now. So really it changes so swiftly that investors just have to keep up to date with everything.

[00:21:59] Rebecca Hotsko: But you mentioned something else there, interest rate differentials, and so you mentioned how interest rates impact gold in the price over time, but can you speak a little bit more? Interest rate differential part. 

[00:22:12] Dana Samuelson: The US Federal Reserve was the first entity of all the central banks around the world to raise rates.

[00:22:20] Dana Samuelson: And as you know, the Fed has been raising rates in this cycle harder and faster than they have in previous cycles going back to 1981. So our central bank has been leading the interest rate charge higher, and the Eurozone was slower to respond. The Bank of England was slower to respond. So that created an interest rate differential where yields were substantially higher here in the US than they were in the Eurozone or Great Britain.

[00:22:47] Dana Samuelson: Now, the Bank of Japan has had their interest rate pegged at 0.25% for, you know, years now, and they’ve just let it go up another quarter 0.2 a half a percent. So if you have money in Japan and you’re getting a half a percent yield on a 10 year treasury in Japan, and you can get a 5% yield, or I’m sorry, a 4% yield here on the us, we’re going to take your money outta Japan and put it into the us.

[00:23:14] Dana Samuelson: So that’s the interest rate differential I’m talking about. Right now that’s narrowed over the last three, four months because other central banks have played catch up and also the US economy is clearly weakening a bit, and I think a lot of your guests are right. The first half of this year could be choppy, but with inflation rates starting to roll over and harder than most people realized, you know, inflation dropped from 9% last summer down to what’s 6% now.

[00:23:39] Dana Samuelson: And they think it’s going to ease some more. I do think it’ll ease some more, probably not much more in the short run. That’s making sentiment change to thinking, well, the Federal Reserve won’t have to raise rates much higher. And a lot of market participants were expecting the Fed to pivot actually.

[00:23:55] Dana Samuelson: Reduce rates in the second half of this year. But after the Federal Reserve meeting a week and a half ago where they raised rates at Quarter Point and Jerome Powells resolution by saying, we’re going to hold rates higher, longer, that shifted things around. So the federal funds rate was going up, where yields on US treasuries were coming down, and now we’re seeing the yields start to come back up.

[00:24:17] Dana Samuelson: So the market has had a bit of a change of thinking as to where interest rates will ultimately go from the next, you know, three to six months. If you follow the two year treasury yield. It correlates really pretty directly to the federal funds rate over, you know, long term. So that’s what I’m really kind of, I’m keeping an eye on the two year treasury yield and the 10 and the 20 year treasury yields to see how wide they are.

[00:24:41] Dana Samuelson: And they’re, they’re kind of wide right. 

[00:24:44] Rebecca Hotsko: Yeah, it seems like it’s not getting better anytime soon. And I think the most recent jobs report showed that in the US we hit the lowest unemployment rate in a long time, strong jobs. And so that further adds to inflation. So now are we going to get back to the narrative where they might have to tighten more?

[00:25:03] Rebecca Hotsko: Because for a while it was kind of the narrative that maybe they over tightened and they went too far, but we’re seeing strength still in the economy. And so it’s just, who knows what’s going to happen. 

[00:25:13] Dana Samuelson: Yeah, that 517,000 jobs report for the end of January was a blockbuster that nobody was expecting.

[00:25:20] Dana Samuelson: Now, I think the market was expecting half of that, and that was what changed a lot of mindsets for what’s going to happen over the next three or four months. That was a sea change shift in sentiment, which has caused yields to perk back up on the US treasuries. And the dollars picked up a little bit too, because the higher interest rates here are going to buoy them.

[00:25:39] Dana Samuelson: And they’ve pressured gold. You know, gold was about $1,930 an ounce, you know, six weeks ago, and it’s correcting now on a higher dollar and higher treasury yields with more resolve out of the Federal Reserve. So gold is about 18, you know, 70 right now. 

[00:25:56] Rebecca Hotsko: Right. And so I kind of want to talk a little bit about that.

[00:25:59] Rebecca Hotsko: And is there any type of market cycle for gold that investors should know about? Because you walked us through the price history, but is there a typical market cycle? 

[00:26:10] Dana Samuelson: On an annual basis. There has been for years, but that has changed with some of the things we’ve seen in the world in the last five, six years.

[00:26:19] Dana Samuelson: You could pretty much bank your money on the fact that gold would rally in price from about September to February and then back off in the spring and summer, and then go through a repeat cycle in the fall into early winter. And that’s pretty simply based on annual supply and. Because of the holiday season in the US that carries on into India and Asia into the early part of the new year.

[00:26:42] Dana Samuelson: More gold is physically consumed off the market. There’s more demand for physical gold in the fourth quarter of the year than there is pretty much for the first three quarters combined. So that’s why you tend to get a late fall, early winter rally in gold on an annual basis. And the, a softer price in the spring and summer, and then a, you know, another re revision of that cycle.

[00:27:02] Dana Samuelson: You could almost bet on it for years. But that, you know, that’s kind of changed dramatically now that we’re going through these big boom and bust cycles that we’ve never seen before. And the, you know, gigantic surge in our debt and now inflation has added a whole nother no confounding element to the mix. 

[00:27:18] Rebecca Hotsko: I mean, a lot of traditional relationships have broken down over the past couple years, and so I guess I’m wondering, because you talked about the negative relationship between the US dollar and gold, and so given that the US dollar has strengthened so much against other currencies, If the dollar you would expect over time, it reverts back to its historical mean, then would that give an incentive or more bullish case to own gold or precious metals in the event that the dollar then weakens?

[00:27:52] Dana Samuelson: Well, yes. Yes. And actually gold is doing quite well. I mean, we measure the dollars with the US dollar  index, which is the dollar against a BA of other currencies, primarily the Euro, the Yen, Swiss Franc is in there to a small degree. The Nordic countries were there at the beginning of 2022, the dollar index was 95 and a half, and gold was about 1840 an ounce.

[00:28:15] Dana Samuelson: The dollar got up to 114 on the dollar index, an 18% increase, and gold went down to 1635 last October as the dollar was. Today, the dollar’s about 1 0 3, it’s still up about seven 8%, maybe 9% compared to where it was a year ago. The gold is actually higher than it started in 2022. So in the face of a much stronger dollar, you know about an 8% gain, which is gigantic in currency fluctuations relative to other currencies, gold is holding its own, but remember the major theme of central banks and competitive market economies worldwide for the last 10.

[00:28:53] Dana Samuelson: Is to make your currency cheaper than other currencies so that you can export more than the other guy. You can make your exports cheaper to increase your economy. So that has, and all governments, our debt has just exploded over the last 10 years, as you know, globally. I mean, I think total global debt was 250 trillion in 19 20 11, and it’s about 360 trillion now, and we’ve never seen this kind of a debt load that we’ve had in the past, and that’s helping to buoy gold at higher levels.

[00:29:26] Dana Samuelson: So gold over the long term has set higher highs and higher lows as it’s gone through these gyrations. And it’s a great way to save money over the longer term, which is I think one of the fundamental lessons I can help your listeners to understand. It’s a better way to save money, true savings as opposed to fiat currencies, which politicians are going to continue to undermine.

[00:29:50] Dana Samuelson: And now with the kind of debt load that we have now, the interest rate on the US debt could be a trillion dollars this year, which would put it higher than US defense spending, which has never happened before. 

[00:30:03] Rebecca Hotsko: Yeah, I do want to get into that with you because what would happen, I suppose, if the people lose faith in the government’s ability to pay back that debt?

[00:30:16] Dana Samuelson: Well, that’s a sea change. That’s a game changer for gold, and that can make gold go a lot higher, which is why other countries have a high appetite for gold much higher than the US does their citizens do. And even central banks have been buying gold at a record clip for the last 10, 11 years, including the Chinese.

[00:30:35] Dana Samuelson: Russia has been buying gold over the last seven or eight years. They sold all their treasuries off a couple of years. I think Vladimir Putin knew that he was going to go to the Ukraine, you know, four or five years ago. He just didn’t know when, and he sold all his treasuries and bought gold. The Chinese have been record buyers of gold over the last 10 years, and other central banks have been buying gold as well as an edge against a default by their trading partners.

[00:30:59] Dana Samuelson: It’s what I think it really is. It’s the ultimate hedge, which is why it’s a good way to save money , just in case. Mm-hmm. , you know, for average people like me, I can’t speak. 

[00:31:10] Rebecca Hotsko: Yeah, and this is really why I wanted to have you on and talk about this more because there are a lot of relevant issues going on right now that I think investors need to be aware of and one of them, you kind of just, you mentioned that. So I think it’s a good segue into my next question. It’s that. The US dollar, the fact that it’s a world reserve currency. Many commodities are priced in the US dollar. It’s caused a lot of issues for countries that are buyers of these commodities. And so there’s a number of countries discussing trading oil for gold instead.

[00:31:41] Rebecca Hotsko: And so one thing that struck me when I read this is, first, how does this payment system even work? And then I just wanted to ask you, do you think we could see a world where countries increasingly do this and want to? Rid themselves of the US dollar as the payment system. 

[00:31:58] Dana Samuelson: I don’t know the figures off the top of my head, but I think 10 years ago the dollar was about 62, 60, 3% of world trade and now it’s about 46% of actual total value of world trade.

[00:32:11] Dana Samuelson: So there’s been a decline in the dollar’s desirability around the world, and we’re seeing, you know, the de-globalization over the last two or three. We’re seeing a definite change in the appetite for, you know, US dollars in other places. Now, Russia said that they would trade a barrel of oil for one gram of gold, which put the oil price at about $60 a barrel at the time, which was a perfect way to peg the ruble to gold, the Russian ruble to gold.

[00:32:41] Dana Samuelson: It was a brilliant move. So that’s one way where gold could be used as a trading vehicle. Now, practically, it’s really not practical. Because to move the kind of volume that you need to move in gold, you need airplanes and, you know, armored trucks and it’s, you know, physically it’s, it  becomes a bit cumbersome.

[00:33:01] Dana Samuelson: And with the amount of money that exists in the world today, it eclipses how much gold there is. You know, if we were to back the dollar with gold, it would put the gold price at, you know, over $10,000 an ounce, I think is what Jim Rickards has. So it’s, it’s impractical, but the US has enjoyed exorbitant privilege because most commodities are priced in dollars and have been since we were the world’s reserve currency following Breon Woods in 1945.

[00:33:28] Dana Samuelson: So we have commodity price fluctuations, but we don’t have currency price fluctuations like other countries do. Right? Which is why they can be more whipsawed by dollar strength or weakness when it comes to buying commodities, which last year was a perfect example of that, where the dollar was so strong, it made things that are priced in dollars, you know, much more expensive relative to what we.

[00:33:52] Dana Samuelson: For these things. So if we lose the reserve currency status US citizens are going to be in for a real shock as to what could happen. And, countries around the world know this. You know, citizens of other countries around the world know this, so, We are going into a phase where there’s going to be less, you know, demand for dollars.

[00:34:09] Dana Samuelson: Now whether another country like China can step up and replace or compete with the dollar is another question because they don’t have transparency in their markets. It’s this command and control economy. They don’t have the transparency in their markets and they don’t have the bond market like we do. But if they are able to partially back the yon with gold, that would enable the yon to have some trust in the international market that it doesn’t have now, which may be part of what they’re strategically going for by accumulating gold.

[00:34:41] Rebecca Hotsko: and I want to talk about that because we were chatting back and forth on some emails about this. You were sharing some charts with me about whether China could actually dollarize or go back on a gold standard. Is that likely because their data isn’t transparent? But it seems like they’ve been accumulating a ton from what they’ve  released in data.

[00:35:01] Rebecca Hotsko: And so talk a little bit about your views, because is it possible, so if the US isn’t the world reserve currency, what are the other options then? 

[00:35:10] Dana Samuelson: Well, it’s the Yuan, or perhaps the Euro could compete because the Euro zone is about a third of the world’s economy. We’re about a third, and in Japan and China are about a third combined.

[00:35:22] Dana Samuelson: Those numbers may be a little off. That’s from the study I did about four years ago, five years ago. So it would take too much gold. It would put the gold price too high to back anything. By gold. The Chinese have been accumulating gold. Their official reserves, I think, are 2000 or 2100 tons of gold.

[00:35:41] Dana Samuelson: The US has 8,000 tons, which is the top holder of gold. The imf, I think, has about 3000 tons. Forget the figures. We have considerably more official reserve holdings of gold. I think the Chinese now, they import gold through the Shanghai Gold Exchange, and we know that there’s about 10,000 tons or more that have gone into China from around the world over the last 12, 14 years.

[00:36:05] Dana Samuelson: And everything that’s mined in China, none of it comes out of the country for export. So if you talk to someone like Jim Rickards, he’s going to tell you that China may have 15,000 tons of gold or 20,000 tons of gold. Which would put them at double or more the US official reserve holdings of gold. So if that is truly the case and they want to back the Yean to some degree with gold, you know, they’re not going to , you know, tell you that’s why they’re doing it.

[00:36:31] Dana Samuelson: One day they’ll tell you, Hey, we have this much, here it is. We’ll show it to you. And this is why we want the yon to be the world’s reserve currency. Or you can see countries trade other commodities they have for other valuable goods. Like Saudi Arabia can trade oil for whatever they want, right? They don’t have to take dollars or yuan.

[00:36:50] Dana Samuelson: They could take wheat or they could take rice, or they could take construction materials, whatever they want. But we could get into a more of a commodity based trading economy than a  fiat currency based trading economy At some point in. If currencies are devalued to the point where they’re not trusted, that’s really where the rubber could meet the road.

[00:37:10] Rebecca Hotsko: That’s, yeah, that is so exactly why I wanted to have you on to kind of chat about that, because it’s very interesting to think about and just what the possibilities could be. And at the end of the day, it’s kind of speculation, but I think being informed about these situations matters. And I want to talk about China for a second because you said Theon is a potential world reserve currency, but would they have.

[00:37:35] Rebecca Hotsko: Go back to a gold standard to make that happen, or not necessarily? 

[00:37:41] Dana Samuelson: Well, there has to be trust in the yuan, so something has to stand behind that. In the US we have the bond market where we can issue debt in our bonds and you know, we never defaulted. They don’t have that yet, right? But they’re the world’s number one most populist country.

[00:37:57] Dana Samuelson: India is about to become the number one most populist country over China. If I’ve got my statistics, And they’re buying a ton of silver, right? So it’s, we just have to see how this plays out. But the US you know, has what, one eighth of the number of people that China and India have, and at some point in time, just the sheer volume of those people relative to the US is going to matter.

[00:38:19] Dana Samuelson: And what they’re able to produce, or what they’re going to need to consume, and who knows when the tipping point may come. Right now, the US continues to lead technology innovation. You know, we’re the most creative, you know, market and, and marketplace, the world’s ever seen. And I love America. I mean, I’m a patriot.

[00:38:38] Dana Samuelson: I just love this country for what it can do. I’m not happy with the way our financiers are. But that doesn’t mean, you know, we’re, we’re going to lose just because we’re outnumbered. But at some point in time, the relative differential of what India and China have as number of people will make more difference than it does now.

[00:38:54] Dana Samuelson: And it may be in my lifetime, maybe not. We’ll just have to see what happens. 

[00:38:59] Rebecca Hotsko: And then I want to touch on silver quickly, because China is, I think, the third largest producer of Silver. And I read an interesting article that talked about how they maybe can’t afford the gold standard, but they could absolutely afford the silver one.

[00:39:13] Rebecca Hotsko: And that’s not new to them. They were on a silver standard before. And so do you think that at all could be an alternative plan too? Or what are your thoughts around that? 

[00:39:23] Dana Samuelson: It’s a possibility. You know, when we took our gold out of our currency in 1933, we kept our silver in our currency until 1964 when we debate our currency in silver.

[00:39:33] Dana Samuelson: Most other countries still had silver coins into the seventies, all the way till the late seventies when the silver price went from, you know, $3 an ounce to $50 an ounce. Now this is a US Silver Quarter made in 1964 and buying it, you can’t. I know you can’t see it on the radio, but you would buy a gallon of gas in 1964, a quarter made in 1965.

[00:39:54] Dana Samuelson: That’s the same as the quarter we have in our pocket today. Would buy a gallon of gas in 1965. Today, that copper nickel quarter you have in your pocket with that copper nickel edge. Well, it’ll get you what, a 10th of the gallon of gas this quarter from 1964. And its silver will still get you a gallon of gas today.

[00:40:11] Dana Samuelson: It’s worth about $5. So silver standard, yeah, that’s a possibility. That is truly a possibility. But again, like gold, these things are hard to execute in practicality because it would take so much silver to do. So it, it’d make the silver price, you know, $200 an ounce as opposed to $22 an ounce, which is where it is.

[00:40:32] Dana Samuelson: And silver relative to gold, I think is actually cheap because you know, gold is near, it’s all time high today, which was 2070, you know about $1,870. Today it’s only off about 10% from its previous high where silver’s less than half of its two previous highs of $50 announced basically at about $22 announced today.

[00:40:53] Dana Samuelson: The problem is most of the silver mines are, you know, they found the easy silver too. So there’s not going to be, and silver is primarily a, a byproduct of other meanings, so they’re not going to be able to ramp up. And same with gold. Most of the easy gold has been found. So it’s going to be hard to say that we’re going to be able to really.

[00:41:11] Dana Samuelson: Find a lot more gold and silver in the ground unless we can get more under what’s in the Arctic Circle or under the seabed. If that, if mining in those areas ever becomes truly practical, we might find some high grade deposits. But I’m not a mining expert. I’m a humble coin nerd and a metals, you know, aficionado.

[00:41:30] Rebecca Hotsko: I did want to ask you then, what is your outlook for precious metals, namely gold, silver, then for the short term, but then long term expectations? 

[00:41:42] Dana Samuelson: Well, as I said, you know, gold has been setting higher highs and higher lows over since 20 2005, 2006, and that’s primarily because our debt has just exploded.

[00:41:54] Dana Samuelson: So I do think the gold price will move higher. It moves higher, faster when there’s times of trouble and worry, and we’re in an inflationary phase right now. Who knows how, how long this will last before it’s controlled. Now, there were three phases. From 1966 to 19 81, 3 waves with the second and third wave being higher than the previous first and second wave, which culminated in US interest rates at, you know, 18%.

[00:42:21] Dana Samuelson: And that was a real time of crisis of confidence when Goldman went from $40 an ounce to $800 an ounce. We’re going through a similar phase of inflation now, and we’re in the first wave. Whether they’re able to truly tape it or not, we’ll just have to see. But we never had the kind of debt we had before and we have it now.

[00:42:38] Dana Samuelson: So I do think the chances of gold going higher, modest. Higher into the 2100 to $2,200 ranges very possible over the next year or two, depending how things shake out just upon our increase in debt. And the fact that the full effects of this rate hike cycle that we’re going through are just now being felt because there’s a lag effect.

[00:42:58] Dana Samuelson: And I do think, you know, despite the economy and the US looking better, you know, the jobs market is literally the. Things to go. We only go into an economic slowdown because the last thing you want to do is get rid of good people. They’re impossible to replace, but when you shed employees, that’s how you cut costs the quickest.

[00:43:16] Dana Samuelson: Which is why if you look at any chart of employment against recessions, employment’s always the last thing to roll over. Manufacturing suffers first. We’ve seen the weakening of manufacturing here in the us. Silver oscillates at a wider degree than gold does. So if gold moves up 5%, silver could move up 10% or more easily.

[00:43:37] Dana Samuelson: Now when gold falls, 5% silver can fall farther than gold does, and we’ve seen that happen. So if gold oscillates in a small wave, silver will oscillate in reaction to the gold price at a wider wave. So if you can catch dips, you can do really well. We had a real, nice dip in gold and silver no last fall when the dollar was so strong.

[00:43:57] Dana Samuelson: So that was a great buying opportunity. I still think over time gold and silver are going to go higher at just how much, how fast. They’re not going to make anybody rich. But if you just accumulate over time steadily, you’ll find that your gold and silver will serve you much better over time and hold your purchasing power better than almost anything else.

[00:44:17] Dana Samuelson: As currencies continue to be devalued through over printing. The last time we had a balanced budget in the United States was two. And that’s concurrently when the gold price hit a cyclical low of $250 an ounce. And that was for a reason. We had a balanced budget, but it was the first time in like 35 years and the last time, I just think that Golden silver’s, a savings account is a, is a great way for people to move forward.

[00:44:42] Dana Samuelson: And if you can’t afford gold, buy silver. 

[00:44:46] Rebecca Hotsko: And then I guess just on silver, is this price silver driven by the same factors as you talked about for. 

[00:44:55] Dana Samuelson: Well, gold is 80 times more valuable than silver, so in one ounce of gold, it takes 80 ounces of silver right now to equal that ounce of gold. So it takes up a lot more room.

[00:45:07] Dana Samuelson: I know it’s a lot heavier to transport the same dollar value of silver as it is to gold, which is why central banks have been buying gold more than they have been buying silver. Just because it’s more compact, it’s easier to have high value in a small. A hundred ounces of gold is about the size of a paperback novel.

[00:45:25] Dana Samuelson: We’re that same 200, I’m sorry, $190,000 of value today in silver. You need a wheelbarrow and a couple really big muscular guys to help you move it around, right? Silver is a commodity, industrial commodity, much more than gold is. So it’s used in other places where gold is more of a currency. Silver has currency aspects to it and commodity aspects to it.

[00:45:45] Dana Samuelson: So they use silver in solar panels. So there’s going to be a higher degree of attrition of silver, which is why when it gets to a tipping point, it could really go a lot higher in price. And if you look at how much silver is in Comax warehouses, we’ve seen a big draw down in available silver for delivery from about 150 million ounces in the Comax warehouse, you know, two years ago down to about 35 million ounces.

[00:46:11] Dana Samuelson: And you know, the US mint can make, you know, 15 million silver eagles in a month if they want to try and do that. Right? So there’s a potential tipping point for silver. It’s, it’s more of a, it’s about 50 50 though, commodity and currency metal, where gold is much, you know, 90 10, I think in that regard, you know, gold is used in industrial applications, but it’s seen more as a st as a store of value than silver, which is about 50 50.

[00:46:36] Dana Samuelson: Commodity usage and currency. 

[00:46:40] Rebecca Hotsko: That’s one of the big arguments I’ve heard for being bullish silver is the applications in clean tech and in semiconductor electronics in general. And so, but I guess it goes back to, like you said, it is quite easy to find then, so that negates the supply 

[00:46:56] Dana Samuelson: aspect. Well, it’s not as easy to find either of them now as it was.

[00:47:03] Dana Samuelson: And, you know, there is a more green, a stronger green movement than we’ve ever seen, and rightfully so. You know, if we can spend less on energy to create our energy needs through solar or, you know, e electric vehicles, that will really help the planet in the long run for a lot less emissions, of course.

[00:47:21] Dana Samuelson: So as India and China really take hold in these sectors, it could really buoy the silver price up quite. The EV market in China is pretty strong for vehicles, but I don’t think so in other aspects, and India is a poorer country, so they’ve got a ways to go yet. Now, this could be a big change over the next 10, 15 years from what we’re seeing today, which could have a big impact on the silver price.

[00:47:46] Dana Samuelson: We’ll just have to see how that manifests. 

[00:47:49] Rebecca Hotsko: And I might have to have you on for an update in a year or so. So we can revisit all of this because it’s a fast changing market. But I wanted to ask you one last question before I let you go, because we were talking about how less US dollars are being used by other nations to buy goods.

[00:48:06] Rebecca Hotsko: And so I just want to drive this point home about why this matters. Can you talk a little bit about what the impact is on both the US dollar and then the economy? 

[00:48:17] Dana Samuelson: Well, you know, going into 2018 we had a, a global economy that was humming at about as, as smooth as it ever could for just in time inventories and everybody cooperating with each other to make, you know, as much sales as possible and keep cost down, right?

[00:48:33] Dana Samuelson: Just in time and lowest cost manufacturer, covid broke the supply chain in that regard. And now we have a political bifurcation, which is also ramping up, you know, Chinese sp. , right? Russia has invaded Ukraine. So we see we’re seeing a, and Taiwan is a major thing that could happen between China and the US in the next few years, if that really ramps up.

[00:48:54] Dana Samuelson: So we’re seeing more political strife now than we’ve seen in a long time. And what this is creating is people that are on the other side of the US are trying to find ways where they don’t need as many dollars, right? And if this trend continues and they want to, Russia wants to trade with China, rather than directly avoid the dollar.

[00:49:13] Dana Samuelson: Saudi Arabia wants to not take dollars, but take you on or take rubles or take gold instead, or whatever. I mean, that’s, that’s ramping up right now. And we’ll have to see how much it goes. But you know, in the US we have a myopic viewpoint where we don’t really understand what’s happening in the rest of the world.

[00:49:33] Dana Samuelson: We have oceans on both sides of us. We’ve always been the best in the strongest for, you know, a hundred years. But usually any country that’s had world reserve currency, Most of those nations have not lasted more than about a hundred years now. We’ve been here for about 120 now as far as the biggest power in the world with the dollar.

[00:49:53] Dana Samuelson: And at some point in time, like I said, China or India could actually challenge us. And that will be a head snapper. For most Americans who don’t really fully appreciate the exorbitant privilege, that having the dollar is the world’s reserve currency provides us. Now, you know, in Canada you see the Canadian dollar go up and down relative to the dollar and it affects, you know, what you’re paying for most everything you need.

[00:50:17] Dana Samuelson: Same thing in Mexico, even though in North America, most of our trading has been done amongst these three c. No, for the US, Mexico, and Canada, now I think a car court to build a car, parts have to go to Mexico and to Canada and back and forth about 20 times before they’re actually finally assembled. So even in our hemisphere, currency values matter.

[00:50:36] Dana Samuelson: And at some point in time, if we just blow up our currency through too much debt, or if other countries gain more traction with their currencies relative to each other or trading relationships grow stronger to the detriment of the. Or the dollar, it’ll, it’ll hurt us. And we’ve already seen a big shift in pattern over the last 10 years, 15 years that most people don’t realize is happening, which is why having a little  golden silver is a good thing.

[00:51:02] Rebecca Hotsko: That was a perfect way to end it. I want to thank you so much for coming on. That was so insightful. You helped clear up all the questions that I was wondering related to the Golden Silver Market, so thank you so much for taking the time to come on today. But before I let you go, where can the listeners go to learn more about you and everything that you do?

[00:51:22] Dana Samuelson: Well, I’m a physical, precious metals and vintage US gold and silver coin dealer. My company is American Gold Exchange. We’re a national mail order company. We’re out of Austin, Texas. Our website is www.amergold.com. We’re consultative in nature. We have transparent, live transparent pricing on our website, and we truly want to help people with what they’re trying to accomplish with physical, precious metals or vintage coins.

[00:51:54] Dana Samuelson: Our business model is based on repeat business and referrals, and we value every client that we get highly. It matters a lot to us and we enjoy a lot of repeat business and referrals. As a result, I’ve got an impeccable national reputation. I’ve tried to give back in a couple different ways to the community that’s been good to me.

[00:52:11] Dana Samuelson: And you know, we truly like to help. So if we can do that for any of your listeners, we’d love to have that opportunity. 

[00:52:18] Rebecca Hotsko: Well, I will make sure to link all of that in the show notes so they know where to find you and more information. And I want to thank you again so much for coming on today. 

[00:52:27] Dana Samuelson: Well, thank you Rebecca.

[00:52:28] Dana Samuelson: It’s been a pleasure. I’m delighted to have an intelligent chat and I really respect what you’re doing and appreciate greatly you’re having me on, and I look forward to seeing some of the other guests that you have, because I’ve learned a lot listening to your podcast. So thank you for that.

[00:52:42] Rebecca Hotsko: I appreciate that. And we will definitely have to do this again sometime. 

[00:52:46] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you never miss a new episode. And if you’ve been enjoying the  podcast, I would really appreciate it if you left a rating or review. This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter,We Study Markets which goes out daily and will help you understand what’s going on in the markets in just a few minutes. So with that all said, I will see you again next time. 

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