Bloomberg recently published a piece called, ‘The Gold Market’s Great Migration Sends Bullion Rushing East.’ The article notes that China has imported 160 TONS of gold since April, India has added 80 tons, Turkey 62, and the list goes on. Is the U.S. — or other Western nations — selling gold to China? And if so, why wouldn’t we be buying it, instead? Carol Roth, financial expert and author of ‘The War On Small Business,’ joins Glenn to make sense of this ‘head scratcher.’ She theorizes what’s REALLY going on with gold, and she explains why the U.S.’s lack of longterm thinking regarding gold, should worry you.
Below is a rush transcript that may contain errors
GLENN: All righty then. I saw a -- I saw a disturbing story from Bloomberg. Last week. And I haven't mentioned it because I wanted to make sure I had some facts on it. I called Carol Roth. I called everybody I know. And they said, that doesn't seem. Well, I don't know. Let me look into it.
Carol is here to explain this. Here's what I found in Bloomberg.
Asia has net imported gold from the West. Since April. The trade flow into China. 160 tons of gold. Into India. 80 tons. Into Turkey. Sixty-two. Thailand. 38 tons. Saudi Arabia, 20 tons. Malaysia. 4 tons. Hong Kong 3 tons.
Where did they get all this gold?
Well, the UK sold 15 tons of gold from their Treasury. 32 tons. South Africa. Canada, 33. Australia, 34 tons. And the United States of America, sold 136 tons of gold. If we send that to China, why are we selling gold when smart money would be buying gold? Hopefully, Carol will have an answer for us in 60 seconds.
By the way, as we're talking with this, let me tell you about Goldline. The United States top economists are saying, that we will enter a recession, in the coming 12 months. If we aren't already in one. The only reason why we're still debating this. Is because Republicans don't have control of the House or the Senate. As soon as they get control of the House and the Senate, I can guarantee you, we're in a recession. And it's their policies that put us into one. In fact, Joe Biden said it just this weekend, they're going to collapse the economy. That's their plan. To collapse the economy.
Oh, shut up. How do we -- I was going to say, how do we -- how do we deal with the amount of lies and smoke screens, that are put out?
Well, you just have to know what is true. What is true always has value.
The dollar won't always have value. Because it's no longer true.
There's no full faith and credit in the United States of America anymore. So what is true? What does the world always respond to?
Gold. They always -- look what China is doing. And India. And then look at what we're doing. Goldline has a deal this week, on their historic graded 5-dollar gold Indian coins. With every box of 20 of the graded coin, you'll receive 100 of the silver Mind Your Business bars at no cost.
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Carol, please tell me I'm reading too much into this. Please tell me. Please tell me.
CAROL: So this has been a little bit of a Nancy Drew mystery for me, Glenn.
I saw this Bloomberg piece as well, and it was a little bit of a head scratcher. So I'm going to take you through some of the things I found, and hopefully we can piece this together.
GLENN: Okay. This is really weird.
Because I went to some really big brains, that know this kind of stuff. No one had an answer for me.
CAROL: Okay. So I think -- I'll wrap it in a bow first, and then I'll walk it back. But I think this is the short-term trader mindset, versus people who have a long-term view on the world. So this is short-termism, versus long-termism.
CAROL: So the first thing that we have to understand, the thing I did was went, oh, my gosh, all this gold is flowing east. Or where is it coming from? Is our central bank that dumb, that they're selling gold?
So I pulled a chart of central banks. And central banks have been net buyers of gold, for most of the year, since April. Which is the same time period of the chart.
That's April to August. They have pretty much everybody is a purchaser of gold. There's almost --
GLENN: Including us?
CAROL: Just a tiny little bit -- every central bank in the world. Which means, even if we're not purchasing it. We're not selling any. There's almost no net sales. So that means our central bank is not the one selling this. We'll take that off the table.
GLENN: Here's what I couldn't figure out either. Is the Treasury the same as the central bank? Does the Central Bank have all of the Treasury's gold?
CAROL: So they're probably not.
But let me walk through where I think this is coming from.
GLENN: All right.
CAROL: So the second piece I went to, was the consumer market. And consumers, seeing what's going on with inflation.
Understanding that a recession is here, and that it's going to get worse next year, have also been buying.
And by the way, we can't supply them. So both here in the US, as well, particularly in the east, much more in the east. There's been an additional premium.
And I'm going, what's going on here. What you have to understand about the market for gold, is that the prices for the gold, when you call Goldline, to buy your gold, like you and I do, Glenn. You're buying physical gold, but that price isn't being set by the supply and demand of you and I buying it.
It's being set by these future markets. By these traders, who are trading contracts.
And all of these derivative products, the options, the futures, they are so much larger than the underlying product.
And, yes, if this sounds like a familiar story. It is one. But the research estimates put the sides of these futures market, at 200 to $300 trillion of value being traded. With the underlying supply of goodly. The underlying supply of gold, underlying supply of gold is like 11 to $12 trillion.
GLENN: This is why I say all the time. Don't buy paper gold. Don't do it.
Don't do it. It will be worthless in the end.
CAROL: Exactly. So let me tell you what's happening. These traders are looking at not just what's happening in the physical supply demand. They're looking at little blips on their screen. And they're saying, oh, well, historically, when we have a strong dollar, that means that's not good for gold. So we should probably get out of it, as the fed tightens their monetary policy.
They have gotten to the point, where these crazy traders are actually not short on gold. Meaning that they have sold more than they have. And this is only the third time since 2014 that this has happened. This happened in 2015. It happened in 2018. And what my researchers have told me is both of those times, as you can imagine, when you have all of these shorts out there, but this crazy macro economic environment. It's prime for a short squeeze. And that's set major floors, and there's been huge rallies involved.
So once again, we have the financialization of a product. A product that is very important to us.
You know, being bastardized by Wall Street. And what happens, in China. And India. And other parts of Asia. Is that they're smart. They go, well, the price is falling. We should load up on it.
Buy low. Sell high. So they actually create a floor for the price of gold. Because they know they can get it at cheaper prices than it's actually worth. So they go in, and they load up on it.
And that's the tenor of what's been happening here, which is just complete insanity. So my speculation, is that institutional investor's gold, that is flowing because these traders are doing the same thing that the traders always do. They're being short-termed, grubby, greedy, and not looking at the bigger macro environments.
GLENN: That means, then we are doing that. We as a nation are -- we're going to be the opposite of the big short. Right?
We're selling, when we should be buying.
CAROL: So the good news is, our central bank. Our country has -- and, again, if this is true. Right?
So I'm just going to report what's being reported. I did not go to Fort Knox and verify, that the gold is actually there.
But we actually have the most gold in the world per -- by a country.
GLENN: I do not know if I actually believe that, but they say -- they say that's 85, or 84.
CAROL: 8100 tons. Tons. Yes.
GLENN: Tons. How much is that worth?
CAROL: I knew that you would ask me that question, and it was Monday, and my calculator wasn't big enough.
GLENN: Try it.
CAROL: It's a lot. A lot.
GLENN: I looked at it, and it's in the two or three digit trillions.
STU: Give me the number one more time.
CAROL: 8100 tons of gold.
GLENN: Which is about 32,000 ounces per ton?
STU: Thirty-two thousand ounces per ton?
GLENN: Yeah. And gold is trading at about $17 an ounce.
So how much is -- if they say we have this -- to me it makes no sense.
STU: 1700 an ounce, you said?
It's a big number. Let's --
GLENN: Yeah. Go ahead. Try to figure it out.
STU: Yeah, I know. Here we go.
CAROL: This is a lot for a Monday, guys.
STU: $440 billion dollars plus.
GLENN: No, no, no. Billion. It's higher than that. It has to be trillion.
STU: I'm going by your numbers here.
GLENN: 32,000 ounces, times eight.
STU: Thirty-two thousand times 8100, times 1700. So I'll do it again. 8100 times 32,000 times 1700, is, let's see. Yeah, 440 billion.
STU: So, again, I think maybe you're -- are you sure about that number of 32,000 ounces? I don't know --
CAROL: I will look that up.
STU: Too low.
GLENN: Look it up. Yeah, that's way too low.
It's got to be in the trillions. It's got to be in the trillions.
CAROL: It's probably somewhere I would say between 440 billion and a trillion dollars.
Again, like you said, it's just the central bank piece of it.
At any rate, the U.S. has more than any other individual country. The Eurozone, as a group, actually has more than the US.
And on a sort of tons to GDP, you know, value standpoint. You know, we are -- you know, we're not quite at our GDP, but we're in sort of a good position.
The only ones that are really stacking up via their GDP, is the Eurozone and Russia. And now China is starting to continue to add to that.
So, you know, it's a very strange situation. And it's also a strange situation, Glenn. If you think about the fact that the traders are doing this, based on, quote, unquote, dollar strength. Because they're looking at the dollar strength versus other currencies.
But they're not looking at the dollar's lack of strength at home. The dollar is not strong when you go to buy your groceries, or you go to pay your rent, or you go to heat your house.
And so that is the challenge. That is what we are. When we go and we buy physical gold, that's one of the things we're continuing to protect against. The continual debasement in the value of the dollar. So there really is a setup here. Potentially for, you know, some sort of a squeeze. Or even the collapse of some point of the paper gold market. Which means, eventually, things would change, to going off the actual spot price, of supply and demand. Which is how this should be based to start.
GLENN: Okay. So I should not be worried that Bloomberg's headline is, gold's great migration, sends bullion rushing east.
CAROL: No. I think you should be worried. And I think the reason why you should be worried is the people in Asia are taking a long-term view. And the people in the West are not. And that is going to come back to bite us. And by the way, usually this ends up flowing back. When the price goes high, in the past, it has flowed back. Because, you know, of course, we'll buy it at the higher price --
GLENN: Which is so stupid.
CAROL: Which makes no sense.
But the people I'm talking to, who really know this stuff, say not this time. We're in a new financial world order, something is going to shift here, and so don't expect that flow to come back the other way.
GLENN: Wow. One last thing, Carol. I appreciate your work on this.
Because I couldn't -- I couldn't make heads or tails of this, and our gold situation is so not transparent in America.
CAROL: It's a travesty. It really is. Something needs to change with this market, it does.
GLENN: It is. The other question is, we just sent the 101st Airborne, over to support NATO.
The Pentagon said, this weekend, we're ready to go to war if we have to go to war with Russia and Ukraine. What does war mean to our economy, if -- if it starts, with Russia?
CAROL: I mean, you know, there's obviously a bunch of layers of scenarios, depending on how bad it is. Certainly, the defense sector will be doing very well.
And it's just a question, of how much is this being fought over there? How much of what we're doing ends up being disrupted? Or does it end up being something that looks more like the recent wars that we've had in Afghanistan. And the like.
So I just it really depends on the scope. But, certainly, if we get into a big escalation here. And this becomes something that is like a world war, a true world war. I think we can all pretty much not take a pretty big leap of faith. To guess, that that is not going to be a good sign for our economy, particularly at a time when the economy is breaking down, and the Federal Reserve has been taking steps to damage the economy to do that, quote, unquote, demand destruction. To create higher unemployment. All of those things. You know, not that there's ever a good time for a war. But it will just exacerbate those issues.
GLENN: Okay. I would love for you to look into something else. Right now, Biden is saying, the G.O.P. will collapse the economy. What he's saying, they will shut down the government. That's a lie. You can shut the government down.
Pay your bills. And not go defunct. Can you not?
CAROL: I would love them -- when they shut down the government, they can't spend any money. He's basically setting this up. He knows the Republicans have a strong chance here. And he knows the economy is going into a worst condition. He's basically setting up the blame for the things he has been created. He's already pinned it on things that will happen.
GLENN: Right. I would like you to look at, how the government actually pays its bills. And you don't go into default if you're a nation, if you shut down. There are ways to do it, so you don't go into default. So we can stop this madness.
CAROL: And we can bust this. I have this great deficit myth, when you have a $1.4 trillion deficit on 40 percent more spending. Would love to chat about that with you.
GLENN: Okay. Good. Thank you very much. Carol, we'll have you on maybe later on this week.
We'll cover both of those things. That's Carol Roth. You can follow Carol, @CarolRoth. CarolRoth.com/Glenn is where you will be taken to her page, where you can find all the information she does with us. CarolRoth.com/Glenn.