Judging Freedom - Inflation and Your Portfolio w/Kevin DeMerritt of Lear Capital

Episode Date: August 22, 2023

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Thank you. Hi, everyone. Judge Andrew Napolitano here for Judging Freedom. Today is Tuesday, August 22nd, 2023. Our guest today is my friend and colleague and personal financial advisor, Kevin DeMeritt. Kevin is the founder and chair of Lear Capital, which, as you all know, has hired me as a paid spokesperson. Kevin is someone I know and like and work with and whose advice I take seriously. But there's a lot for us to talk about. The BRICS group, Brazil, Russia, India, China, South Africa, began their meeting in Johannesburg today. They want to take the world off the U.S. dollar and they want a new standard. Might it be a gold standard? How could all of that affect us? Could these countries, all of which are smaller than the United States, possibly affect the value of what you earn and what you own? So that's what we're going to talk to Kevin about.

And we'll talk about the gold and silver. Why invest in it? How invest? How to invest in it? What do you do with it? Where do you keep it? Kevin, it's a pleasure, my dear friend. Welcome back to the show. Well, thanks for having me. Always a pleasure, Judge.

Of course. Let's start with BRICS. So Brazil, Russia, India, China, South Africa, they're meeting, their economic ministers are meeting. President Xi was zoomed in. President Putin was zoomed in. What are they trying to accomplish? And how might that affect the value of what ordinary folks in America earn and own? Yeah, great question. I think what they're trying to do is just get off the dollar standard. We've weaponized the dollar against Russia, against other countries for different things. And, you know, they don't want nothing to do with that. It should be just the reserve currency and we can trade in it. And that's not what it's led up to be at this particular point. So there they just don't want anything to do with it. You add in inflation and you're holding

a dollar that had as high as 9% inflation and now back down to 3.5%, 4% inflation. You don't want that either. So they want a currency that they can rely upon, that they can trade freely with. And that's what they want. Why it's a concern is that for a country to have any other country want to trade in any other currency but yours starts to become a concern, especially when you back it by gold. And I believe that if this goes through, Judge, this will be the biggest wealth transfer in the history of the nation. How will it be a wealth transfer, a wealth transfer from whom or what to whom or what, Kevin? Well, when you talk about these five countries, a lot of people think, okay, you got Brazil in there. How big are they? You know, you got Russia in there. Yeah. If you add up these countries, it's 3.2 billion people. It's 40% of the world's population. So this is really

a tipping point. If you just had those five countries by themselves, you're talking about 40% of the population. So how does the wealth transfer take place? It takes place for one reason. If you purchase or if you back that currency, this BRICS currency with gold, and the United States is running approximately last year, a 960, call it a trillion dollar deficit, 960 billion. So call it a trillion dollar deficit. It will be this year. And the other countries are running a surplus and I'm using their currency. What I need to do is purchase their currency back by gold. So let's forget the currency for a second and just say we're trading in gold at this point. Then the trillion dollars deficit that I have is going to them

in what? In the form of gold. What do I get back? Cars, toys, clothing, everything that depreciates and I've sent them gold. You are transferring hard wealth to them to the tune of a trillion dollars more than I'm getting back. Okay. So because the value of gold goes up, if we pay a commercial entity in one of these BRICS countries with cash that is backed by gold, that value is going to go up and the product he sold us, just like everything else is going to depreciate, it's going to go down. Well, not only that, yeah, basically what I've done is I've traded gold at a value for a car that depreciates, right? So I've transferred wealth to your country, especially if I'm running a deficit. If you and I were trading back and

forth and I was a trillion dollars in the hole compared to what you sold me. You now have a trillion dollars worth of currency backed by gold and I have less a trillion dollars worth of gold if you're trading in gold. So you've transferred the wealth and because of all of that, you've pushed up the price of gold, which pushes up the currency because you need to purchase the currency, which is backed by the gold, to trade in the first place. So this is an extremely concerning plan that they have, because not only do you get a new currency, you get the transfer of wealth that ends up behind it. How do world events, whether it's Donald Trump getting indicted for the fourth time or the Ukrainians apparently losing the war in Ukraine? My people on my show tell me it's not apparent. It's obvious. The press doesn't want to recognize it.

But how do world events, however you look at them, whether you like Trump or hate him, whether you want the Ukrainians to prevail, you think we should have nothing to do with that. How do world events affect the value of gold? Well, I think everything that's happening right now is printing up dollars. You're talking about the Ukrainian war. I don't know the exact dollar figure that we've given them so far, but we had to print it to give it to them. So every dollar that we print makes the dollars that are already outstanding worth less and less and less. And then the government wonders why we have inflation. Well, you printed the money. The definition of inflation is not hard to understand. It's too much money

chasing too few goods. You print up more money, you are causing the inflation or the devaluation of the dollar. So the events that you're bringing up usually have something to do with money. It's usually about oil, it's war, it's something like that. And there's a cost to that. And that cost is increasing our deficit to an extent that I don't think is going to be sustainable for very long. Why does the value of gold go down when the stock market goes up? Well, usually gold has an inverse relationship with other assets. That's why people diversify with it. They use it as a hedge against the volatility in stocks or real estate. Similarly to what we saw when the dot-com crash happened,

gold skyrocketed. It was up three and a half times. Again, in the 2008 real estate crash, you had the same instance. So gold's doing its job as an insurance policy to hedge against the volatility in the other assets, which right now look like they're back to nosebleed levels because of all the money that the government printed.

So let me let our viewers know that because we're doing this live, you guys can send a message to me with a question in it, and I'll ask it to Kevin. We've gathered some questions already. The questions are absolutely fascinating, and I'm looking forward to these answers. So I'm going to read this question. This is Barry from Boston. I have tinkered with buying gold for years and never did. My money stayed in stocks, and I did pretty darn good. I know I need to take some profits off the table and invest in some gold and maybe silver because things seem more volatile and risky, and I'm not in that position anymore to take chances.

I need to preserve my wealth in case another crisis happens. So what are your top three reasons why I should invest in gold now? Okay, Barry. Okay, Kevin. First of all, great questions, Barry. Printing dollars and creating debt are the problems, but you can't print gold. So the question Judge was asking prior to this, with all this money printing, what's that going to do to gold? Well, if you look back to the year 2000, the price of gold has outperformed the stock market. And it's no coincidence because Greenspan started the QE when the dot-com crash happened, and we really haven't stopped. So the price of gold is going up as they're printing more and more money. Okay, QE, QE is quantitative easing, but what is that to the layperson?

Quantitative easing is just the government printing enormous amounts of money like we saw in 2008 back in the dot-com crash. And also in the pandemic, they printed a lot of money then. So as they print that money, the value of your current currency out there, the dollar in your pocket becomes worth less, but you can't print gold. So more money chasing a fixed asset is going to drive the price higher, which is exactly what's happened. People are dumbfounded that the gold price has actually outperformed the stock market when a lot of people out there are saying, no, no, no, buy gold, buy stock. So that's one reason to purchase precious metals. Secondly, in my opinion, is that assets become overvalued because of all the money printing. And that's where we are here,

again, because of the pandemic. The real estate market looks like a lot of different pockets are overvalued, especially on the commercial side. The stock market looks like valuations are back to nose lead levels of 2008 and 2002. So if you want that offset or that hedge against volatility in those areas, then precious metals would be a good idea. And they have been again in 2000 or 2008. And lastly, look for assets on sale. And there's not a lot of assets on sale out there. But when you look at silver, it looks like it's on sale. And it really looks like a double play investment right now.

Which means to me, the double play is that if the economy does well, the solar and all of the demand from the industrial side is pushing the value up slowly. But if you get some sort of 2008 or 2002 correction in the markets, we already know silver can go to $49 an ounce. We're trading around to 49 an ounce we're trading around 24 an ounce so you get uh a great hedge against uh the volatility in the market but you also get uh if the economy does nothing horrible then you the demand that's driving from solar and medicine and so on and so forth with uh silver should do very very well um michael. Michael in Texas with a much shorter question. I've seen your commercials on TV and I heard the judge talk about Lear. Can you explain what a gold IRA is and how it works? Yeah, great question. A gold IRA is no different than an IRA

you would hold at your brokerage house or your work or what have you. The difference is it's physical gold. So you could transfer a portion of your existing IRA or 401k to a gold backed IRA. And we are literally placing physical gold into that IRA that's held at a depository for you. You can take possession anytime you'd like. Other than that, both of those IRAs are exactly the same. So if you want to hold physical gold, you want to go back to IRA. This is from Linda in California. I might know this, Linda in California, but I'm not sure. I am 67 years old, had my IRA invested in the stock market for years, and I'm afraid to do anything different because they say the stock market always comes back, always wins in the long run.

If I decide to diversify into gold, actually, I really like silver. Do I invest all of it in precious metals or what is recommended? Yeah, that's a great question. First of all, you should never invest all of your money in any asset. I don't care if it's stocks or real estate or what have you. Diversification, don't put all your eggs in one basket has kind of ruled the day. And I would recommend that here. We recommend no more than 20% of your assets in precious metals. And the older you get, typically you want or need income. So that percentage would start to go down. But to say that the stock market has always outperformed, we just got through talking about how gold is outperformed. And I can tell you what the numbers are. If you would have put $100,000 in the stock

market in the year 2000, it's worth about $320,000 today. If you would have placed $100,000 in the stock market in the year 2000, it's worth about $320,000 today. If you would have placed $80,000 in stocks and $20,000 in gold in the same time period, you'd have $385,000 today. The gold has outperformed the stock market over that 23-year period. So, like I said, diversification will help you with the volatility. It will also help you possibly with your performance. Again, don't put all your eggs in one basket. Martin from Florida, it feels like gold and silver just hover around the same price all the time. Why is that? Well, if they hovered around the same price all the time, then it would be impossible

for it to have outperformed the stock market over that same period when everybody has really been a stock market investor. So it doesn't just hold steady. It's been increasing. And my opinion is that will increase even faster as these deficits continue to go higher and higher and higher. I'm going to guess you get this one a lot. Why is it better to have the physical metal instead of buying a gold mining company or an ETF? What's an ETF, by the way? Well, an ETF is an exchange traded fund where they say that it's backed by gold, but it's not 100% backed by gold. So that would be one of the differences is an exchange-traded fund is not backed 100 by gold it's backed a percentage by gold and a percentage by futures contracts um and so that's if you don't want to have 100

gold backing then you can you know use an exchange-traded fund uh there's also some third-party risk where is that gold stored? A lot of it's stored outside the United States. So if something horrific happened, a war or what have you, then I don't know if you could get that gold back into the United States. So that would be another difference rather than holding the gold yourself. And a gold mining company has some third party risk, right? I mean, you don't know if you wake up and the CEO has put the company in too much debt or maybe hedged the gold in the wrong way. So you've got these third party risks.

But each one of those depends on your goals and your risk tolerance. So each one of them have pros and cons. And you just have to really sit down and kind of educate yourself, which we try to help people do with our information. What are those pros and cons? And if people call and get it, I think they would understand a little bit more than I can explain it in the time we have here. We got a couple of more. Desiree from New Orleans. Where do I store my metals and what do I do with the physical metal when I need the cash? Oh, great question. So yes, we get this question a lot. Where do I store my metals? Well, you can put it in a safety deposit box. A lot of people believe that if the banks closed down, they

were not able to get their gold. That is untrue. You were always able to get whatever you had in your safety deposit boxes. So to put it in a safety deposit box, you can have a safe in your home. We can store it for you with Delaware Depository. It's a very small fee to have it stored. So you have a lot of options for storage. As far as selling back, it's as simple as picking up the phone like you would a stockbroker and say, hey, look, I want to sell my metal. We lock in the price before you ship it back to us or we take it out of the depository. You're locked in and you know what the price is before you ever send it back. So it's very easy to liquidate. How is Lear different from, say,

this is Gary from Arkansas. How is Lear different from, say, a coin shop that is close near me, where I can walk in and just purchase gold and silver and I can store it right there? Yeah. Well, probably a couple of differences. I mean, Lear has $3 billion in trusted transactions. Your local dealer probably hasn't done that. We have dedicated representatives for each customer. We want, when you call, to get the same person. Local dealers typically cannot help you with an IRA or a 401k backed by gold.

We have real-time updates. We're large enough to buy back when you're looking to sell. So if everybody wanted to sell a local dealer, typically they take your metal in and then they sell it and give you the cash. We don't do that. We lock in your price. Like I said, you send the metal in and we send you your wire. And look, we have thousands of four and five star reviews. So hopefully we're doing something right over here. But again, look, if your local dealer, if you feel comfortable just walking down and handing him the money rather than sending it across the country, you know, by all means, I think it's more important to own gold right now than, you know, hey, look, we're going to bicker over who's better or who's worse.

But I believe with our research, Judge, we have an enormous amount of free research for people to help learn about gold and silver and gold backed IRAs. And when people decide it's best for their family, hopefully we have the best pricing for them and the best service. So that's what we try to do over here and love to get out the free information so everybody can understand the market a little bit better and see if this is something that would help their family. What does Lear make available for people that just want to learn about the market and learn what menu of opportunities is out there available for them yeah you know we have our gold investors guide uh which goes over all the different types of precious metals and some of the pros and cons there uh we also have special reports i mean you and i are talking about the bricks we have our tipping report uh special report that we just put out talking about the

bricks how this is going to possibly affect the gold market and the value of the dollar. So we have a lot of reports about what's happening in the economy and how best to diversify yourself possibly with precious metals. So hopefully, when people read through this first, they get some sort of an idea of what would be best for them. And some people are going to say, hey, look, this just isn't for me. So hopefully that information will help. Before we started the show, you asked me to ask you about a special offer for viewers of Judging Freedom. Yeah, you know, we wanted to do something special. You've been so good to us and just such a great relationship. We wanted to credit each person who

filled out the form at judge or learjudge.nap, that's L-E-A-R judge.nap, or call 800-511-4620. I think it's on the bottom of the screen. Every one of those people, we're going to credit the account $500. You don't have to do anything. Just request the free information. We'll send you everything and the tipping report and all the information that we spoke about and credit your account $500. So we help you start out. If you do business with us, then you can use that $500 for shipping, for your IRA fees, or what have you. So hopefully it's something special that people appreciate. We appreciate you, Judge. Thank you. Lear, judgeknapp.com or 800-511-4620. Kevin, always a pleasure. We have Southern California weather

here today. So I'm usually envious when I'm looking out your window, but I'm seeing the same out my window. But the hazy, hot, and humid is coming back tomorrow. Well, there you go. Hey, look, at least it wasn't the pouring rain that we had. Right. Thank you so much, my friend. All the best to you. More, of course, as we get it on Judging Freedom. Larry Johnson at 3.30 this afternoon. How badly is Ukraine losing the war? Why don't we know about it?

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