Ray Dalio, co-chief investment officer of Bridgewater Associates, recently wrote that policy makers short on money will likely raise taxes and prevent capital flows into “other assets” like gold and Bitcoin. E.B. Tucker, director of Metalla Royalty and author of “Why Gold, Why Now” said that the government already has the tools to do this. “Everyone gets this idea that the [government] will raid your house and look for your gold. It’s not necessary. All you have to do is limit the ability to transact gold in the legal market, and then you assess an excise tax,” Tucker said.
The government has confiscated gold once before. Can they do it again? And would they joining us to discuss this as Eby Tucker director of retailer loyalty and author of why gold? Why now? Eby, welcome back to the show. It's been too long. Thanks for having me using your book title. Now. I see why gold, why now?
Everywhere in other media articles and, uh, and, uh, and headlines and videos. Congrats w well that, that's how, you know, you've, that's how you know you've done something great is when people copy it. What was it? Um, uh, imitation is the purest form of flattery. I think that was a, that's an applicable quote. I want to talk about Ray Dalio's, uh, recent LinkedIn posts about possible gold confiscation.
I'm just going to read his quote here. He came out with a scathing review and critique of America's current tax environment. He said policy makers who are short of money will raise taxes. And won't like these capital movements out of debt assets and into other store holders. Of wealth assets and other tax domain.
So they could very well impose prohibitions against capital of movements to other assets, example, gold, Bitcoin, et cetera. What's he referring to exactly. Get this happen. Absolutely. It always happens. Capital controls can't move money across borders. I mean, you saw in Ukraine several years ago go, they had big point ATM.
So I saw them when I was there. People were putting the grief nut into the Bitcoin ATM and then going to other countries to withdraw it. They probably stopped this. I mean, look, you don't have control of the society if the money's flying out of the borders. And you can't tell where it's going to go because money always flows to a friendly place.
Now Medallia was talking about, I feel like it's not really fair to, for him to put these types of a post out there because it scares people and it doesn't give him proper context in my book. Uh, chapter four of my book, uh, we talk about the 1930s confiscation. I tell a very personal story about my great grandmother who had a cigar box full of coins, and she gave them to the bank for $21.
And then the government, you know, revalued gold at $35. And I always said to my grandfather, was she a sellout? I mean, I always thought she was a great person. Why did she do this? And my grandfather said, you need to understand that every single newspaper, every single day had headlines about how the government needed the gold.
FDR said that we needed the gold. We were going to be under attack. Our treasury was, was, was in jeopardy. And if you had kept this, I mean, you would have to been like a real anarchist to do this. No one would have done this. That was a member of kind of like regular society. And so when I had that context, I said, well, it looks.
This is kind of like watching the television every day and seeing the, the mainstream narrative, because we live in a narrative driven market. I mean, this is not the type of market that we grew up in. This is a narrative driven market. So the narrative is set and the narrative is reinforced. Now, why are we painting that picture for people going back?
Okay. So, so look at what's happening today. W where's everyone putting their money. They're putting the money into Bitcoin. It's, it's all the rage, you know, you've got one, a trillion and a half worth of Bitcoin in the world. And everyone says, this is how will and Dahlia mentioned Bitcoin, but people say, this is how we'll protect our money from government seizure.
But the. Chapter 17 of my book explains how Bitcoin was created, which no one ever talks about and how the government's going to have fed coin. The chapter's called it's like Bitcoin will be the central bank, digital currency and all the, all the transactions that have ever occurred on the Bitcoin.
Blockchain are part of the record. No one ever understands that that's digital wealth storage. That's held on a public blockchain, but David, this right here is not digital wealth storage. Okay. This is, this is about $7,500 worth of gold right here in my hand. This is this analog as it gets. Okay. It's it's it's it's it's about is, is basic and, uh, even a house fire can't destroy it.
Uh, if someone came barging into my office with a gun, maybe they could. Right? So, so when you look at what's going to be confiscated, the governments, there's no need to go after gold at this moment because nobody wants gold. I mean, if you're watching this video, I hate to tell you, but you're in the minority, which means you're early.
Okay. W w when Bitcoin was $10, The people that were talking about it, including myself, I was writing a blog at the time we talked about it. It was, it was very interesting. You know, we, we, weren't making an investment case. We were just saying, this is, this is happening. And we were in the minority. People said, well, that's very dumb.
Well, now everyone says, that's brilliant. So where are you with gold? Everyone says that's dumped. So there's no need for the government to demonize gold because most people have no idea where you'd even buy it. Okay, but explain what happened in the thirties with your grandparents. Now it wasn't is confiscation the right term to use.
They didn't really confiscate it per se. Right. They've just exchanged it with, with, with money, with the game they gave them. Okay. So, so that's right. So everyone gets this idea that people are going to raise your house and look for your goal. It's not necessary. All you have to do is limit the ability to transact gold in the legal market, and then you assess an excise tax.
So I'm just going to give you a hypothetical. So gold takes off and it goes much higher than it is today. And everyone's panicking because, uh, there's fed coin and all your transactions are taxed and there's no way to move money and you have a social credit score. And if your social credit score is too low, then your fed coin wallet won't work at the amusement park because you've been a bad boy.
And you've been saying things against the government. So now you're. Your credit score is down and you can't can't spin. I want you to picture this world. Okay. It's already happening in China, by the way. That's exactly. What's already happening. It's not a, it's not scifi. This is, this has already happened.
Putting you Facebook, all these things are all tracked all the time. And you, your phone knows where you are all the time. It's listening to you. So if you think this is crazy, then you're crazy. Okay. So, so I want you to picture this, and then you have, you have this ounce of gold, which has been declared a, an asset for only subversives.
And it's something that you cannot absolutely cannot have. And then you, you, you try to sell it well, how do you sell it? Because you can't sell it anymore because there's an excise tax. So they say, go ahead and sell it. And it's a 90% tax. Okay, well, I'll sell it on the black market. Well, that becomes very dangerous because remember all they don't need to come in and kick in your door.
You just limit someone's ability to sell it. I mean, think about if you had a hundred thousand dollars in cash. You, you essentially, it's very difficult to get rid of that to spend it because everywhere you, if you go into a department store and try to buy, you know, a thousand dollars worth of expensive clothing, they have to call over a manager and ask you where you got the cash and fill out one of those Benson reports to report suspicious activity.
You, you get where I'm saying? I mean, I mean, so, so, so when you think about confiscation, stop thinking about, uh, Jason Bourne movie or something, I mean, it's just a limiting the ability to transact. And so then you have to say to yourself, am I buying the gold to transact? No, my book is the subtitle of my book pictured right behind me.
There is called the war against your wealth. So your wealth is not about trading. Your, your wealth is about, it's a physical representation of your hard effort and your thinking and your abilities and all the things that you've worked for. It's it's the war against your wealth and how to win it. That's where people's heads need to be oriented.
Right now we understand something here, because look, I grew up in North America, uh, but I have friends in China who were talking about the exact same thing. You, you just discussed. You have a social credit system everything's tracked. They have capital outflow controls. You're not allowed to, I think, uh, uh, withdraw more than four 50,000 USD worth of money outside of the country and transferred outside of China.
Why would that happen in North America? Why would that happen to a liberal democracy? Are we in a liberal democracy? Or do we just read about that in the, in the social media feed as a story? I mean, this is, this is a narrative. I mean, the narrative is, this is the land of the free, I mean, it's really the land of the free money right now.
I mean, that's, that's, that's what it is, right? The, if you notice in the U S. The States that that were the most cooperative with lockdowns and shut their whole economies down are the ones that are getting all the federal money. And then the States that, that tried to let businesses survive are the States that aren't getting any money.
So you start you just, if you really look at this objectively, and I want you to forget what you learned in social studies class, and I want you to actually look at. For example, if you make enough money, the tax situation that you have in the U S the tax code is so complicated. Believe me, I have three people working with me on taxes, and they have three different opinions about what we do.
None of them can agree with each other because they say the fact is we have to make our case, and we'll get into an argument with the IRS probably three years from now. And of course, we want to do the right thing, but we don't know it's too complicated. The law is too complicated. And so people in the U S are dreaming.
I mean, this, this system already exists. Well, why would you have a system that's so complicated that everyone's a criminal because criminals are easier to govern the country people. And so you have to make a system that's so complicated that everywhere you turn you're, you've broken some kind of rule.
And when you have that, it's easy to control your society. Now, I don't think the government is some evil. Entity. It's not the case. The nature of a government is to rule that's the nature. That's the whole, that's how it exists. It's all around the world. It's this way. Thousands of years of history that we have recorded, it's this way, this is not new.
And so when you, when you think that this is something that's new, forget about that. What would you do if you had that kind of control and don't even tell me that you would be this like, you know, free, free and easy leader, because it's not true, you know, it's, it's, it's a, it's a mountain of power and you climb up to the top and it looks different than when you're at the bottom.
So, so, so David part of, part of what I. Try to do on a daily basis is to stop looking around at how I wish things were okay. And instead look around and assess how they are and then do the things that I can do something with and the things I can't like in the system that we're in right now. Gold is somewhat interesting, but gold royalties are much more interesting.
So as you know, I helped put together a gold royalty company that's been quite successful. Gold's up about 50%, the company's up about a thousand percent or 1100% because we built a business to capture those royalties. And my point is that's something we could do. Okay. We can't change the fact that the U S we'll we'll have $6 trillion worth of debt financed.
Spending which they call stimulus in an attempt to control the economy and to run it one direction and run it. The other, we can't control that. Okay. Forget about it. But, but what we try to do is assess what is happening. I think the price of gold is going higher. I don't think it's going as high as some people in the business that are my friends that I respect a lot, but it doesn't need to go so much higher.
For the value of a gold royalty to go much, much higher. You're getting leverage to the, to the moving price of gold. Do you see how, when you look at things this way, first of all, you're a lot more successful. You're a lot happier and you can go with the flow. Okay that you asked me what I would do if I were the government.
Well, I'm reading this statement from Dahlia when he shares the viewpoints of many other prominent investors, which is that there's a concern from the government that capital flows are moving away from debt assets. In other words, government owned treasury. So. Capital is flowing away from where the money, what the government wants the money to go.
They're going into gold going into Bitcoin. Well, I'm thinking of the government. I could do one of two things. If I need this cash, I could, like you said, restrict capita movements into golden Bitcoin, or I could create gold denominated or crypto denominated currencies, and issue them like central bank, digital currencies.
It's happening now. Isn't that just the next logical step. David, if you were the King of a country, I would move there immediately and bring all of my assets and friends with me. Okay. But, but so yes, but I don't think there's a need to make a gold backed, uh, central bank digital currency, because this has no purpose in that the problem with a gold backed currency is that you can only make as much currency as you can find gold.
And there's just not that much gold in the world. And in the major countries, the world know that. That's why gold is a tier one asset and central banks have got vaults full of it. And Bitcoin is, is not that type of asset. Now Bitcoin is a real asset. People want it. There's wealth storage. It's going to go higher.
If you remember when I was on your show before I told you to go to 25,000, I told you to go to 50,000, there's probably going to go to a hundred thousand. Okay. So, so like this is something that's. Existing in the world today. Okay. But, but it's, it's not like gold because with gold, you have to physically go get the actual stuff and you have to store it.
It's very complicated. Okay. Now, to your point, what's going to happen is, is that fed coin is not going to have anything backing it, except for you'll be locked out of the system. If you're not cooperative. So, if you, if you, it's kind of like a vaccine passport to travel around, you can't get on the airplane unless you've had a vaccine.
If you have to have a vaccine passport on your smartphone, and if you don't have a smartphone, then you can go through the process of applying for a paper one, and you can't go anywhere because it takes too long to get it this giant bureaucracy. All right. So everybody's already thinking about what that would be like and going along with it and saying, well, as long as we're safe, So when you have fed coin, if you don't have a central bank digital wallet, or if you've been a bad citizen and you have it, you've been criticizing the wrong candidate and supporting the other candidate, which is not the favorable candidate at the time.
And, and you're, you're dinged. You can't use that. Bitcoin to transact business and people. Aren't going to take your cash outside of one, five, $10, because it's because they, there aren't any, I mean, a hundred dollars is the largest bill now. I mean, look, I was just on a, I was just on a trip to look at some art.
We were having lunch. You have lunch. Okay. No wine, nothing. A hundred dollars. I mean, it's crazy like a nice, a nice lunch for two as a hundred dollars. It's bizarre. I mean, there's. The a hundred dollars bills when the largest bill for something like 50 years now. And so it's never going to be any bigger.
So my point is, is that, is that you're already limited with cash. Okay. Bitcoin is infinitely tracked. There was a guy last year who was hacking people's Twitter accounts getting paid in Bitcoin. He did it to Obama all of these people and they found this guy, how did they find the sky? They track the Bitcoin payments.
Okay. So your Bitcoin is anonymous. Yeah. Sure. All right. Let's let's see, let's see how that works out in the long run. Right? So the digital currency is going to be the way that they go and they don't have to back it with anything. They can back it with a narrative and people believe it. The thing you were talking about, the limiting your capital flows, if you're supporting the wrong candidate, that sounds very Orwellian.
Are you, is that, is that from a moot, that real life we were just quoting a movie. Wow. I mean, it's, it's, it's, it's not, when you start thinking about all these different sanctions and the Swift. System and the, you know, if the IRS has a problem with you, I'm not sure if you know this, but, but they now have the ability to, to make your passport invalid until you sort out the problem with them.
So when you really start looking at the facts, it's not that crazy. I mean, and, and the reason why the Swift system exists, I have friends that are very into crypto and they're always lecturing me about how the Swiss system is so bad. I said, that's right. But do you know why the Swiss system exists is because there's 13 nuclear powered?
Carrier battle groups floating around the world that does tell you that you're going to use the Swift system or else you're going to have a huge problem in your front yard. Okay. So, so that's why the Swift system works. It's not because of the technology. And so people say, well, this coin, or that coin is so much better and faster and lower fee, all that is true.
And it literally doesn't matter. Okay. So, so the, the one with all the power makes the rules. Right. I have another point to make now Dalio talked about capitalism being inhospitable. This is what he said exactly. United States could become perceived as a place that is inhospitable to capitalism and capitalists though.
This specific wealth tax bill is unlikely to pass this year. The chances of a sizable wealth tax bill passing over the next few years are significant. So he sees this wealth tax, a PR proposal. By Elizabeth Warren, as a step towards major capital outflows, is he right? Where are you going to go? Where are you going to go?
You can't have a bank account outside of the country, unless you file treasury forms every year. Reporting all these things. You can't renounce your citizenship, unless you pay an exit tax. Now they're talking, the, the death tax is, you know, close to 50%. They're talking about raising that, lowering the amount that's exempted from that upping the audit.
So on estates, uh, upping the audits on people in the top tax bracket range. But believe me, believe me, there will be loopholes. And if you have enough money and you're connected in Washington, and you're a billionaire, you will find a loophole because they'll create one for you. So you'll, you'll be able to create some sort of entity that supports the sea turtles or something and tie your money in there.
Believe me, this is always what happens. The lobbyists go to work, and if you give them enough money and you find a way you create a special exemption for yourself, but where you're in big trouble is if you're high net worth. High net worth people have it rough because you're getting into this zone where you don't have enough money to do anything to get away, but you have just enough money that you've had a taste of what this is like ultra high net worth people, which is a certain category above high net worth.
They have it a little easier because they can, they can get involved politically. We're going into a system where DeLeo is, is a little bit late to this. This, what we're experiencing now is not capitalism. Okay. Let me give you some examples. In my book, I call this a crisis economy. You're in a perpetual boom that has occasional crashes that lasts three or four weeks or a month or two months or something they're very fast.
And then they shoot straight back up with government intervention. That's not capitalist a capitalist system. What would happen is all the people that borrowed too much money to start stupid businesses would fail. And other people that had been savers would come in and buy their assets in a bankruptcy proceeding.
That's a capitalist system. What we're in is a crisis system. It's controlled by a central authority. For instance, when we had the problem last March and the market went down 35% in a couple of weeks, and the fed stepped in, they bought a junk bond, distress debt, right? But not from everybody only from certain firms.
Well, why some firms and not other firms. So what I'm saying is if you're close to the center, then you have an ability to have an advantage. If you've been to any sort of centrally run economy, this all sounds very familiar. Okay. I've been to these places and know people that do business there. They say, if I lose my license, I'll lose my business.
Well, what's your license while my licenses to run this factory. Yeah. But you built a factor. Yeah. It doesn't matter. They could take it away from. Okay. So, so. Property rights, freedom of speech. I mean, these are the things that make us society free. These things are gone. Okay. They're not gone a few months ago.
They've been gone for a while now. I mean, I mean, you, you, people have got to stop getting themselves upset about these types of ideas and, and look at the facts. Okay. Look at the facts. This is a country where you can speak freely, as long as you support the narrative. If you speak freely about something that doesn't support the narrative, you'll be canceled.
Imagine, imagine this it's like, imagine this is, this is not free speech. I mean, I mean, it's, it's crazy when you hear people say this, the best thing about this country is it's nonsense. It's total nonsense. Okay. No, I'm not complaining about that. I'm just saying. Make your bets, according to what's really happening, not according to your social studies textbook from the fifth grade and your government school.
That's the problem that people have in America. Let's okay. Let's tie this back into, um, placing your best now and we'll wrap it up. So, uh, how to war, how to win this war against your wealth. Eby gold is down, but I mean, look, last, last quote from Dalio, he said just you want to beat inflation? Just go buy stuff.
Yeah. Yeah. And what kind of stuff do you want to, I mean, so people need to understand that that winning the war against your wealth is not about speculating your way, you know, into some sort of dream life. I mean, that's not typically the way it works. Wealth is built over time. I mean, it's, it's the result of hard work and good decisions.
And focus and determination. And all of a sudden the snowball begins to get bigger, you know, things, things tend to work. So what do you do with that money dahlias? Right? You buy stuff. Now, the thing that's nice about the gold is that you can, you could take it anywhere in the world. I mean, you can get the ounce of gold, the bar gold.
Yeah, you can put it somewhere. You can give it to your kid. You can sell it later. You know, it's always has some sort of fungible value. So, but gold in the book, I talk about how much gold should you have? I give you my formula and the book is about education. You can't make decisions. You can't go around on the internet looking for somebody that has some magic decision that you can make really fast over the weekend.
And change your life. That's called a scam artist. So what you have to do is you have to have someone that takes you by the hand that says, all right, let's understand the ground rules here. And then you're going to be in a better position to figure out what to do about it. Cause it's not that complicated.
Believe me, the only reason why you think that I'm better at, than you is because I have more experience because I was doing this a long time ago, but what you need to understand is you can do it. Okay. You were smart enough to earn the money. You're smart enough to know what to do with it. So I like gold, a small amount of gold because it has analog wealth.
It stores your wealth outside of the system. I don't think cryptos are totally insane to buy because we're moving into this, uh, digitization of the economy. Uh, I don't, I don't have favorites in that space and I don't really care that much, but I can tell you that 10 years from now when you buy a house or, or, uh, get a dividend or something, that transaction will happen on a blockchain.
So that's, that's where we're going. How do you play? That is very complicated. I'm going to let you talk to someone else about that. But real estate. The problem with real estate is if you're going to make 3% on your rental real estate or something, or 4%, the depreciation taxes. Maintenance and other tenant headaches that come along with it are definitely not worth it.
So Dahlia's right. But to just go out there and buy everything is kind of a mistake. So I like royalties. I mean, Nova royalty is a copper nickel royalty company. Now why copper nickel? Well, because copper nickel mines are massive and there's not very many of them. And so if you can wrap up, uh, royalties on these things, every single electric car has got an absolute humongous amount of nickel in the car.
There's a hundred pounds of copper connecting everything. These are the metals that are behind the green energy movement. Okay. You can't. You cannot even come close to achieving the, the us goals and the world's goals for, for clean energy, without a ton of copper and tons of nickel. And so Nova royalty has gone out and acquired significant number of these royalties.
And I'm highly optimistic because I don't have to get involved in mining. I just have the royalty. So as the price of these things rises, I capture 50, 60 years of nickel and copper production. And that to me is extremely attractive at a time when wall Street's not focused on it. Now that company was born out of the founders of Metalla, which as you well know, is is this is a similar company in the gold and silver royalty business.
Now. I found, these are ways that you can have, you can go with the flow. So as the flow of things, uh, goes and raises the price of gold and silver and copper and nickel, um, you don't need to worry about the cost of pulling these things out of the ground because the royalty is 1% or 2% or whatever it is of, of production for the life of that asset.
Okay. So dahlias. Right. But buying yourself, you know, a duplex. Uh, in a city that is rapidly turning communist and won't let you evict the tenants and is making you install all kinds of, uh, safety. Things, because you got to keep them from hurting themselves and okay. That's not a very good heart asset because it's going to be extremely difficult for you to do anything with that, because then you go to sell it in a few years, nobody's going to want it.
So you got to sell it at a loss. All right. So you want to buy the right hard asset and I think you can do it. I would start reading with reading the book because it's it's you can read it in one day. It's not very difficult. I get emails on LinkedIn from people all the time that they read the book in one sitting or two days or whatever.
And the book is about helping you. I'm telling you everything that I use and the time like this to make decisions, um, I'm sh I'm telling you all the things that there's no secrets, the secrets are in the book. So once you're done, you can handle this, you can do it. And, and so I think people will see how I see the world and I've been able to make decisions that have turned out quite well.
And, and this is not overnight success. I mean, you. As these things evolve, you have a S you have a multi-year commodity cycle. I mean, we're just in the beginning of it. It's not even popular right now. Tell your friends, you bought a gold royalty company. They'll say, what is that? They don't even know what that is.
Now, five years ago, you told me you bought a crypto. And they said, what is that? I never heard of it. Is that a password for your. Computer is it some kind of math problem? They don't know what it is. So, so basically, uh, you see where you are in the cycle, early stages of the commodity cycle. So if you want to get involved in that, I think it's smart.
Absolutely Eby. Thank you so much for your time. Great talking with you as always. I look forward to our next chat. Thanks for having me. We'll talk soon. We'll talk soon. Thank you for watching Kitco news. I'm David Lynn. . .