If you're interested in understanding them from the standpoint of a legendary market expert, you're in the right place.
Lynette Zang shares her opinion on precious metals, the possibility of the U.S experiencing hyperinflation, the new regime shift, and much more!
— Lynette Zang (@itmtrading_zang) May 8, 2020
Is the economy imploding due to the Coronavirus or is there more to it?
George Gammon: All right, guys. It gives me a great deal of pleasure to bring someone back to the Rebel Capitalist Show that I really enjoy talking to.
Her name is Lynette Zang. She's with ITM Trading.
She is the head market or the chief market analyst and she has actually been in these markets since 1964.
Lynette, welcome back to the Rebel Capitalist Show.
Lynette Zang: I am so happy to be here, George. Thank you for having me.
George Gammon: What people don't understand and let me just throw it out there and I'll get your take on it.
Everyone's saying no one could have seen the coronavirus. It was completely out of the right field.
There's no way you could have predicted this, and all we have to do is come in with some bailouts and have the Fed print up to $45 trillion or whatever it is, and then we can get this V shape recovery and go right back to where we were because the economy was so strong and yada, yada, yada.
What they're not understanding is the fact that the coronavirus is simply a pin.
That's it. It just happened to be the windshield that was in search of our bug, as John Mauldin would say.
Lynette Zang: Yep.
George Gammon: So, you can't sit there and blame this on the coronavirus when we had a market cap to GDP of 150% plus.
Lynette Zang: Right.
George Gammon: We had corporate debt at all-time highs.
We had consumer debt at all-time highs.
We had no savings and I'm not just talking about the consumers, I'm talking about corporations.
Lynette Zang: Corporations, exactly.
George Gammon: Everyone is freaking out right now, but think about what you're freaking out about.
Let's just say that we have like a Dr. Chris Martenson scenario or Erik Townsend, and I think they're completely accurate, but they would be on the kind of more realist side as opposed to an optimistic side.
Okay, so the United States goes into lockdown mode.
Let's call it for two months, and then summer comes, it goes down a little, and then we most likely have to deal with it again in the fall.
But let's just say that's what happens.
Okay, what you're saying, and the catastrophe of the economy not being able to produce income or spending for two months, should that really be a big deal if we were the greatest economy of all time?
If we had a justifiable unemployment rate of 3.8%, or whatever it is, don't you think that we could have just not left the house for a couple of weeks without the entire system completely imploding?
Lynette Zang: Right.
George Gammon: I mean the fact that people are talking about the system collapsing on itself just because a restaurant has to shut down for a month, doesn't that tell you everything you need to know about the fragility of the economy in the first place?
And if it wasn't the coronavirus, it would have been something else.
Lynette Zang: Something else, exactly.
George Gammon: Anyway, I'd love to hear your thoughts on that.
Lynette Zang: Well, I agree with you, actually 100% because we've been watching the economy implode on itself.
The only thing that was saving it was more debt, and so what they're doing right now is allowing people, corporations, and businesses to take on more.
We cannot bail out the entire world.
I'm talking about governments and central banks because that's what they're trying to do, is just throw money at the problem.
But this does usher in universal basic income, let's just print it, let's just give it to people.
They have to pay their bills, but that also takes whatever little bit left in purchasing power OA.
Ultimately, President Trump said, “Well, when this is over, everybody's going to go out and spend and everything is going to be wonderful again.”
I do agree with him. When we're no longer cooped up in our houses, people are going to want to go out.
And if they'd given the population enough fiat money, they are going to spend that money and that's going to likely usher in the hyperinflation.
I cannot tell you how many people said to me, “Well, they did it before and look at this, there was no inflation.”
Well, those are only people that are listening to the talking heads and ignoring their personal experience, because number one, that's not true.
Your cost of living has expanded dramatically since 2008, and number two, when they create all this money, it must go someplace.
So where did it go?
Did it go into the stock market?
It went into the bond market, the debt market that you're referring to, and into the real estate.
But all of that debt has been securitized, turned into securities, and then sold back to pensions, to mutual funds, to ETFs and their dislocations in ETFs that doom loop where they're daily liquid, but the assets that they're holding are not daily liquid, and they may actually be very illiquid.
This has not been tested yet, because the rise of the ETFs took place after 2008.
So I agree with everything that you said. Without a doubt.
We were just wondering what was that black swan event that would tip everything over, and honestly, I really hate to say this, but when you look at financial system shift changes, which is what we're going through, a regime shift, there is always a lot of depopulation, there always is.
So, I'm seeing the U.S. in the stimulus package. I hate that they call it stimulus, but whatever.
George Gammon: I know.
Lynette Zang: It's not stimulating, but okay.
Will government stimulus take us to hyperinflation and digital currency?
George Gammon: You know what I call it? I call it intoxication.
Whenever you see a stimulus headline just replace that word with intoxicating.
It's just the same thing because it's the drug addict like Schiff always says or the person that's drunk or the guy that's juiced up on steroids.
Normally it would weigh 130 pounds, but now weighs 250 pounds and we're saying what can we do to stimulate his weight, so he gets back up to 250 pounds or what can we do to stimulate the drug addict to get them high again.
If you just look at things in terms of being artificial, that this is not a natural level then I think it makes a lot more sense.
But one thing I wanted to go back on is the MMT or helicopter money…
Lynette Zang: Yeah.
George Gammon: And one thing I've been thinking a lot about is when you have these types of programs.
Milton Friedman always said there's nothing more permanent than temporary government programs.
Lynette Zang: Exactly. The truer words were never spoken.
George Gammon: I know, but two things.
Number one, if the Fed has to take their balance sheet to, and I'll put that in laymen terms, an additional $10 trillion, $20 trillion, $40 trillion, who knows, to temporarily paper over the problem, how do they bring that back in?
How do they unwind their balance sheet?
Let's remember that quantitative easing one was supposed to be temporary.
Remember unwinding their balance sheet was supposed to be like watching paint dry.
Lynette Zang: Right.
George Gammon: Well, that wasn't the case, and the repo operations going back to September 17, remember, Lynette?
It was a temporary glitch.
Lynette Zang: Temporary.
George Gammon: Temporary glitch. Nothing to see here, right?
Lynette Zang: Right.
George Gammon: So number one, how are they going to unwind that, and if they can't unwind it, what're the ramifications?
Number two, let's say they start doing MMT where they send everyone $1,000 a month just as a precautionary measure.
This is an emergency, we have to do it, but let's say they do that for six months.
People are going to re-adjust their spending habits or their behavioral patterns based on receiving that $1,000 a month.
So how do they pull that back?
I mean, who's going to be the politician that's going to say, “Oh, no, that $1,000 a month was nice, but now, unfortunately, we're going to have to stop it.” How does that play out?
Lynette Zang: Yeah, well, it doesn't.
They cannot stop it, but the way that both of those play out is in a hyperinflationary flame that will then destroy and justify.
I mean, this is justifying the shift to a digital currency, that's part of the stimulus package is for a digital currency, the digital wallet, a great excuse to do it.
I mean, honestly, I do think they have to do it because we've already shifted into gig work, where if these people don't work, they don't get money.
If they don't get the money, they can't pay their bills, and we're a consumer-driven economy. If the consumer can't consume, you got a problem.
So the way that it ends is in a huge fiery hyperinflationary event that then justifies the shift into the next fiat system.
And if we're not paying attention, I mean, a lot of my work is about us retaining choices because do you really trust these guys?
They set this whole system up knowing that it was failing, transferring everybody's wealth, and think about the fact that this really does solve the retirement problem and the shift in the U.S. and the Social Security pay-as-you-go.
Well, if people aren't working, therefore, they're not contributing to the Social Security System.
Therefore, what started out with I think 153 contributors to every beneficiary Social Security recipient, I don't know why they don't give you more current numbers that I think the most current numbers are from like 2016 or '15, or something like that and it was 2.8 workers.
George Gammon: Right.
Lynette Zang: Well, if we go into 30% unemployment, there probably won't be 2.8 workers contributing to this pay-as-you-go system.
And the government when there was excess, they spent it, just like the corporations sending out the money into special dividends and to stock buybacks and to all of these things, and now they need a bailout.
But when they talk about bailout where they give government money, what people don't realize is, that's us.
That's tax dollars, and we are the ones that going to ultimately, well, I'd say have to pay it.
But it's going to justify shifting into a whole new system, because there wasn't payable before, and with unlimited and those are the terms.
Boy, if we didn't make this clear enough, let's make it even more clear: Unlimited.
And let's do this program and give money away and that program and give money away.
I mean, do they have a choice?
They had a choice a long time ago, to really make sure that whoever couldn't afford it, a true capitalist system, where if you failed, you failed on your merits, and if you succeeded, you succeeded on your merits.
Well, that's all been convoluted to crony capitalism and zombie firms that couldn't meet their payments before this and they were already dead.
But hey, they're so well known, the banks didn't want to show the losses on the books.
And here's my little rant.
Because every year, I take a look at the special program that they created for the banks to make sure that they were really safe and secure.
George Gammon: Liquidity coverage ratio or the G-SIB?
Lynette Zang: Yes. Exactly. And then they allow the banks to shift all of this money to shareholders out of the system.
Well, if your deposit is in that bank, guess what's getting bailed in?
George Gammon: Yeah, right.
Lynette Zang: I mean, guess what's getting bailed in?
They're highly leveraged, especially with derivatives, those big bets. Somehow, I don't know that doesn't count as leverage?
George Gammon: Right.
Lynette Zang: I think that counts very much as leverage, so the whole system was weak going into this and it doesn't survive. In my opinion, it does not survive.
George Gammon: Yeah.
Lynette Zang: It actually didn't survive in 2008.
The current experiments that they've done between 2008 and now, that was just barely life support.
It doesn't survive. It'll be interesting to see what the foundation of the new money is going to be.
Talk is that it will be based upon transactions. Right now where it's based upon growing debt in the new system, when you buy something that creates new money.
I mean, what we're going into is we're going through the fourth revolution. We really are.
George Gammon: Yeah, that's interesting, so an actual transaction itself is what grows the money supply.
That's really, I'd have to think through that.
Lynette Zang: Exactly.
If we were to have hyperinflation, what definition are we using, 50% or 1700% per year?
George Gammon: Well, Lynette, when you talk about hyperinflation, what do you mean by that?
What type of definition are you using? Are you talking about 50% per year? What is your definition?
Well, the technical definition is indeed 50% per year, but since you're now looking at global central bankers and global government programs, in unlimited amounts, I would be thankful for 50% a year.
George Gammon: Right.
Lynette Zang: I think it will look worse than Venezuela, definitely.
Because what they're already doing is so much bigger than what Venezuela had done because now you have the entire world agreeing.
And that makes it a very different scenario.
So, I think that it will jump very quickly, maybe to, it wouldn't surprise me to see it at 1700% inflation.
You go to the store, and they're behind you, well, actually you don't have to go behind you anymore because they could just do it digitally.
But if you pick up whatever can at a buck by the time you get to the cash register, it's 10 bucks, you know?
George Gammon: Yeah, I know.
Lynette Zang: That's the importance.
I mean, you really, I got to say this and we do need to talk about what's happening in the physical gold and silver market.
I was there in 2008. And I really thought that this would look pretty similar to that on steroids, so people are wondering, “Well, we'll see gold go down.”
Although the last couple of days certainly, yesterday, it jumped to 83 bucks, we'll see where it finishes today and maybe it's going to jump 100 bucks or something like that.
But when you have margin calls, in other words, you borrow to buy stocks and the stock market is imploding, then you have to sell whatever the market will buy, which is part of the problem with the ETFs and their lack of internal liquidity, which people don't see yet, but they will.
They definitely will.
It's why the government went in and backstopped the commercial paper and this and that.
We're backstopping everything. We're backstopping everything.
So when we're in that hyperinflationary event, yeah, people are going to go out after this, and they're going to start shopping with all this new money that has been created.
So you'll have this flood of money chasing a few goods, and there's your hyperinflation.
And the stock markets? Yeah, they're going to zoom right up there.
Hey, Venezuela had the best performing stock market year over year, over a year since I think 2011 or 2012 when the hyperinflation kicked in.
But when they lopped off those zeros, guess what happened to the stock market?
It went almost to zero.
So much of the guys on TV want you to buy and have a long-term horizon.
How do you even know what the value of a stock would be?
With all the government money printing, there was no good price discovery in these markets.
It was just based upon stimulus.
Market, I don't know where it's going to close yet, but today, when I looked at it before we came on, it was up to something like 1200 or 1300 points based on the stimulus, because once they create that money, it must go someplace.
But a trillion times zero is zero, and that nominal confusion piece, where people marry those numbers when those numbers mean nothing, they mean nothing.
The bolivar has more value as a napkin for an empanada than it does to go and buy anything with.
But your gold and your silver, which is used in manufacturing, in the financial markets, in art, in jewelry, it's used in every single area of the global economy.
So no matter where you go, there is demand.
Sometimes less in certain areas like manufacturing right now and sometimes more in certain areas like the financial system.
Lynette Zang: But I got to tell you, at ITM, this is really what's been happening, 2008 looks like chump change.
We've got people waiting in line to buy, seriously.
The other day I counted and there were 33 people, yes, we had to wait in line in 2008, but not 33, 35 people in line.
And forget silver, I mean, our wholesalers, because we have a long-term relationship with them, they're telling us that they'll still get us the product, and in 2008 where they would short something to us.
In other words, we could still get something because they had a lot of confidence.
They knew they were going to get it. They're not shorting anything today.
If they have it in their possession, then we can sell it and they're assuring us that they have plenty, but you can't pick and choose.
You're going to take whatever you can get.
I heard of somebody the other day through one of our consultants who said, somebody had sent in their money, waited in line and because he had to wait in line, because everybody does, the price had moved like, I don't know, two bucks an ounce.
I think was silver, something like that. The premiums had grown because of the demand.
George Gammon: Right.
Lynette Zang: And he's like, “But it was only two bucks yesterday when I was checking with you,” or something like that and the consultant said, “Well, we'll send you back your money then if you don't want to do it.”
Oh my, God, I would be so grateful and I am so grateful for whatever I can get because the consultants, we have the specialists that we can buy from if the wholesalers give it to us, but I got to tell you, it's not the best stuff.
But hey, I'll take it, I'll pay the premium on it, and I'll say thank you very much because that's what's holding my wealth and my purchasing power as we go through this.
And I think perhaps that people can start to see the opportunities that present during a crisis.
George Gammon: Right.
Lynette Zang: For example, in Phoenix, you go to downtown Phoenix, and I was blown away by the number of high rise buildings that are being constructed.
I mean, you would think that we were really in boom time, but those are all done on debt and leverage and sold off to investors, so guess what's most likely coming back on the market?
George Gammon: Yeah. It's not just on debt it's on almost 0% interest rate debt.
Lynette Zang: Exactly.
George Gammon: It's on artificially low-interest rate, so the hurdle rate is a lot lower.
There are so many things I want to ask you.
Why don't you explain that?
Well, first of all, what I want to say is when you throw out numbers like 1700% inflation, a lot of people I think would say, “Oh, Lynette, there's no way.
That's nonsense. You're exaggerating.”
Let me be clear with people. You've got to work the math, so let's say that the Fed's balance sheet right now, is it about 4.5 trillion.
I mean, they're buying so much on a daily basis, who knows where it can be.
But let's start with the fact that yesterday, they came out and announced they're doing $125 billion a day.
A day! In quantitative easing.
This is not a repo transaction where it's just overnight where they get the collateral, you get the money, the next day, they take the money back, and bam, the money supply is supposedly back where it was before.
This is where they're buying, they're admitting that they're buying those assets, printing that brand new funny money and putting it into the system, to your point, who knows where it goes.
Lynette Zang: To the banks first or hedge funds.
George Gammon: Yeah, right.
But now they've got all these four-letter programs where they're not only doing interactions with the primary dealers, but they're also doing interactions with the real economy, the hedge funds, the financial institutions, so those are creating more deposits.
It's not just reserved being created at the Federal Reserve.
Those bank accounts are the primary dealers, big difference between the two.
And you guys, if you don't know what I'm talking about, make sure you watch some of my more recent videos where I explain that.
Okay, so let's say they're doing $125 billion right now. They're saying that's just for this week.
Lynette Zang: Yep.
George Gammon: Well, like QE1, like the repo market.
They said that was temporary, so if they do this for the next year, just back to the napkin math really quick, and granted I'm sure they're not going to be doing this on holidays, but they're going to have to peg the yield curve.
They're going to have to do all these bailouts, so this is a realistic number if you extrapolate this out of a year, that takes their balance sheet to $45 trillion.
$45 trillion, they're increasing base money by 10 times. 10 times! And a lot of that could go directly into the economy.
And let's not forget, I think as Americans, we have the tendency to believe that the Federal Reserve is in control over the amount of dollars that are in the world.
But you know as well as I do, through the eurodollar system and a lot of other things, there's a lot of dollars that are generated outside of the United States.
A lot of dollars live outside the United States, and it's not just dollars that originated here with the Federal Reserve.
So let's just say that there's $20 trillion inside the United States in actual dollars or checking accounts, whatever measurement you want to use.
There's more than that outside of the United States.
So call it another $20, $30 trillion to the point where Jeff Snyder thinks the eurodollar is the actual global reserve currency and it's not the U.S. dollar.
I don't want to go down that rabbit hole, but my point is there's so much money that's out in the system.
If that starts coming back home, and we don't have the increase in the number of goods and services produced, it actually gets very close to those numbers that you're throwing out.
I'd like to add one more thing to that.
We're just talking about the increase in the money supply.
What we're not talking about is the decrease in the amount of goods and services.
Most of the time we just think of inflation as a result of an increase in money supply chasing the same amount of goods and services with the same velocity or increased velocity.
Well, now all of a sudden, what if we get this supply shock from what's happening with the virus where all these global supply chains get shut down and the domestic supply chains get shut down.
So you go to Walmart, now all of a sudden, there's nothing there.
You go to Home Depot, nothing there, and this very well could happen in the next couple of months, so now you have all this additional money that's in the system that's chasing a fewer amount of goods and services.
And again, my whole point is if you actually run the math and think this through on multiple levels, it's not a stretch to get to those hyperinflation numbers that you're talking about.
I'm not saying it's going to happen, but the probability is far greater than zero, that's for sure.
Are we being financially repressed?
And you talked about price discovery, and I think that's hugely important.
I'd love for you to expand on that a little bit.
The way I explain this to most people, you have to understand that the interest rate is the cost of money, and money is one half of every single transaction.
So, if the Fed is artificially controlling the cost of money or the price of money, then basically they're artificially manipulating the price of everything.
Lynette Zang: Everything.
George Gammon: Therefore, how do you know what a can of Coke is worth? How do you know what a stock is worth? How do you know what a bond is worth? The point is, you can't.
Lynette Zang: Exactly.
George Gammon: You have so much more experience than I do in this. I'd love to hear your thoughts on that.
Lynette Zang: Exactly.
Well, look, this has been coming for a really long time as all of the markets have become more and more financialized.
Meaning that in really simple terms, Wall Street became more important than Main Street.
And when you look at the fact that we've been in a 30-year bull market in bonds, in other words, as the kickoff, as we transitioned into a pure debt-based system, the Federal Reserve pushed interest rates all the way up on the fed funds rate was actually over 21%.
So, they had all that ramp time to lower the rates and you can see that happening, just look at any long term graph on interest rates, and you can see that.
So they've been picking winners and losers, and if you read the word from the IMF, they actually talk about what's called financial repression where they're going to determine your perception.
Perception management, because if they can manage your perception, they can manage how you move through things.
So they determine all of that. The reality is we haven't really had good price discovery, which is what a free market is supposed to do.
You've got buyers and you've got sellers, and wherever they meet, that's actually the true price.
However, we haven't really had that since the Federal Reserve took over controlling completely inflation.
If we even just look from 2008, when they started the quantitative easing program and they drop those interest rates down to zero, and they maintained it, who didn't know that they were not going to be able to raise rates or reduce their balance sheet?
Because every single government that attempted to do it since 2009, failed.
Talk about a temporary program, and now with 1700% or $1.2 trillion, I mean, those are just numbers.
They don't really mean anything.
They will do whatever they can to make things appear to be better than they are for the few, so forget price discovery.
And that works to your favor, presuming you can actually buy physical gold and silver because those are severely undervalued to their youth.
Keep in mind that gold and silver in any form is monetary at its base.
So, when I was running numbers to what I thought the reset number was going to look like, based upon the amount of debt in the world, and based upon the amount of gold in the world because here, the amount of gold is finite.
There's only so much of it, but the amount of debt is infinite.
I ran the numbers and I would always say we're around 10,000 because as you just indicated, if I said what really the numbers showed me, people would go, “Oh, You're out of your mind, Lynette, you're just a crazy.”
But the reality is, and I'd have to crunch these numbers again because it's been a while since I've done it, but when I did it, it was really 53,000 for an ounce of gold.
Now, that may actually sound like a lot, but you have to understand what that 53,000 would actually buy you.
It's the purchasing power that matters to you and me, not whether or not the dollar, well, this does matter, too.
But you hear about the dollar being so strong and it is, it's spiking, because as you said earlier, all of those governments and corporations issue dollar-denominated bonds and they have to pay those bonds back and service those dollar-denominated bonds with dollars.
But they don't create the dollars and they don't even earn the dollars.
And so, the interconnected nature of everything is coming home to roost and we really have to also talk about the IMF with their SDR, their internal currency.
Because they don't even have to create debt to create it.
They push a button and wala! And they will be the lender, the global lender of last resort.
They created the SDR, stands for Special Drawing Rights, people always ask me that, but it's just a name.
It doesn't mean anything.
But they created it in '69 to take over as the world's reserve currency, when they didn't have to because Kissinger went and created the Petro dollar blah, blah, blah.
But when they didn't have to, they didn't just dismember everything that they created, they just let it sleep.
Lynette Zang: They tested it in 2009, and they have what's called a substitution fund.
So if those global countries with sovereigns, governments, or corporations are sitting in dollar-denominated instruments, they simply send them into the IMF, into that substitution fund.
And then the IMF converts them into SDR denominated whatevers, debt, bonds, which are the same thing actually.
And then what are they going to do with those excess dollars?
Guess where those are going?
They're coming back, other than the amount that they need to retain because an SDR is composed of at the moment six different currencies, but they can change that.
They can have every currency in the world in that if they want to.
So we'll end up with two local, the U.S. dollar currency as well as the SDR currency.
They've been looking at doing that for a while, and the other thing that they're looking to do is hold in digital form.
Hold title to all of your assets in these coins.
So now, you go shopping, it's pretty easy to spend it, especially if everything's on your phone and you decide you want something.
Okay, well, there's your spending your equity, the title is held by the IMF.
Now, they control everything and they are the world reserve currency.
They've talked about having a retail SDR, which you and I would actually have access to, as well as the wholesale SDR, which is what governments and banks would have access to.
Are we moving towards a government-backed digital currency or a global one?
George Gammon: So you're under the impression that we're not going to go towards a U.S. government-backed digital currency, but it's going to be a global digital currency put out by the IMF and backed by SDRs, is that what I'm hearing?
Lynette Zang: I think we're going to have both.
I think we're going to have the local because one of the things that they know during these currencies, it's not like this has never happened before, right?
And so back in 1913, it was a U.S. dollar in October of 2013 and it was a U.S. dollar Federal Reserve Note after December of 1913.
The same thing in 2000, in 1971, it was the U.S. dollar in July, it was the U.S. dollar in September.
So they have to keep things looking as normal as possible to get us just to go along with it and not give them push back.
So, I think we will have a U.S. dollar coin, they will probably keep the name, but we'll no longer hold the title of the world reserve currency.
I believe that that will be held by the SDR under the control of the IMF.
And keeping in mind that the members of the IMF are every treasury secretary as well as every central bank chief in almost every country in the world, and they're all independent, none of them are elected officials who really has control, and that's what I think it's going to look like.
I mean, I can say that it makes some level of sense because it's easier to transact on a global basis, which consumers then could also transact on a global basis if they use those retail SDRs.
Especially if every single country puts their currency or I should say, the SDR holds every single currency in there.
So you do the transaction in SDRs, but wherever you live locally, it would just express it to the local currency.
George Gammon: Right.
It goes back to how much of your freedom do you want to sacrifice for efficiency or security.
For me, I think they've gone way, way, way too far.
That's one thing I wanted to get your opinion on and I know we're running a little low on time, but I wanted to save my best questions here.
Lynette Zang: Go ahead and ask the questions.
George Gammon: Yeah.
Going back to the illness, I'll say, so this video doesn't get demonetized.
I go back to 9/11 and you remember what it was like to fly before 9/11, I remember what it was like to fly.
And then we had this issue which obviously was real, it was dramatic, we needed to pay attention to it, but as a result, now, we have so much more government intervention and so many more restrictions on our personal liberties.
I would argue that they're actually counterproductive, even for our safety, but flying now, as we can all see, is way different than it was just through time and that's how you can visualize it.
Lynette Zang: Right.
The limitations of our personal freedom
George Gammon: But what type of Patriot Act or type of limitation on our personal freedoms do you see on a moving forward basis?
Because of what we're dealing with right now with the illness and this mass intervention with government and the Fed?
Lynette Zang: Wow, that is a really good question.
I would like to point out before I go there, that they put in the TSA the day before Thanksgiving.
And I mean, and this is a big part of it, because at that point if people had refused to fly, then they wouldn't have been able to put that through.
But because they did it right before a holiday when everybody wanted to go wherever they were going to go people just accepted it and it's grown into this really disgusting monster that we have today that frankly, it doesn't make me feel safer.
I hate to say this, but I think that the same kind of thing could indeed, if we're talking martial law, I think they can regulate a lot of things.
Because it isn't that happened then and they didn't do anything.
Actually over a very long period of time, whether it's in the banking system or just in the movement, your ability to congregate.
There are laws that have been put on the books, that if you don't even have to know that you're congregating in a place where a government official is that they can arrest you, and charge you $10,000 fine and put you in jail for a certain period of time, just for being in a place.
So I think that we could see a lot more of our freedoms taken away and I think that China is showing the world how to do that.
We were definitely in the surveillance economy and they've even talked about, they said this would not fly in the U.S., but how great for China because they can track everybody's movements.
So, if I'm going to go talk to this person and I'm by law, not supposed to, then they would know about it.
So I think what this could very well do is promote that surveillance economy even more, even more. It scares the heck out of me.
George Gammon: Yeah.
And people will sign up for it willingly because they're so willing to sacrifice their freedom for just an ounce of perceived security.
Lynette Zang: Perceived. Exactly.
Gold and silver
George Gammon: Alright, let's go back to gold and silver because obviously, you're a specialist there.
Lynette Zang: Mm-hmm (affirmative).
George Gammon: When we talk about gold going to $10,000 an ounce, $50,000 an ounce, although it's going to that level, do you see it increasing purchasing power or just maintaining purchasing power?
Does it go up in nominal terms, is it real terms or what do you think?
Lynette Zang: It's kind of a combination, okay?
Historically speaking, I mean, right now it's been suppressed, so it's severely undervalued, so that will change, and in that way, it would increase your purchasing power.
But it really is about maintaining your wealth and really keeping your powder dry.
Because globally, on average, through currency regime shifts like we're going through, 25 ounces of gold or the equivalent, would buy say an entire city block buildings and all.
So it's not so much the number, it really is putting you in a position to take advantage of the opportunities that arise because certainly central banks are buying gold, hand over fist.
They're consuming like 20% of the global output and they've been doing that, well, really since 2010 according to the graphs, but they stopped selling, they stopped leasing in 2008.
So, why are the central banks buying an old relic if it has no value? It's because whoever has that maintains their power.
Purchasing power, yes, but also global power into this financial system.
I think that's why you've seen both China and Russia voraciously accumulating gold, and we really don't.
I mean, if anybody really thinks they're disclosing everything to us, they really probably need to think again.
They probably have a lot more.
But if you're doing what the central banks do, then you're probably going to be in a much better position.
I can't say on the other side of this mess because the opportunities will present, not yet, definitely not yet, as far as converting that into income-producing assets.
But I think anybody can look out there now and see how devastating this is going to be to a lot of corporations.
George Gammon: What type of insight do you think the chart of the stock market price in gold gives us? What type of insight does that give us, if any?
Lynette Zang: Oh, it gives us a lot of insight.
Historically it goes back to a one-to-one level, which means that if they could somehow make the stock market stop at 20,000, although it got pretty darn close to 18, then at a one-to-one ratio, that means that you would see spot golds go to 20,000.
But spot gold is still a contract, and it's the physical metal where you've got the global demand.
A GLD is not going to cut it because that's a contract and you don't have access to the underlying physical.
But, JP Morgan does, because they're an authorized participant.
So you look at this picking and choosing.
But yeah, if the stock market and gold does what it historically has done, which means goes back to one-to-one ratio, I somehow think that what we're dealing with now is going to blow that ratio out in the water because who even knows how many are going to survive this.
Nobody, and when they do start earning, as you pointed out before, and people go out and they start shopping, there's not going to be as many goods out there to buy.
So I think that we are in uncharted waters right now with everything that the central banks and the governments are doing at the same time, which in my strong opinion guarantees the absolute demise of the fiat money.
So you have got to have something real that can hold its value.
In hyperinflation, people buy anything just to try and maintain its value.
I suggest that this is the time to be doing that, not when we go into hyperinflation.
You already want your position built and secured by that time, because that's the piece that's really going to bring those other opportunities to us.
And for me, it will be interesting to see because I said right along that I think it's going to look like Japan.
It might look like Japan.
It might look even in some ways better or worse, depending upon your perspective, than Japan because their commercial real estate dropped 95% from the high.
George Gammon: Right. So, it didn't recover really, did it?
Lynette Zang: No, exactly.
No, but people still need to have shelter, and businesses still have to function, so there's your opportunity.
You have those going like that at the same time, you've got gold going like this.
You take a little bit of that and you put it into those income-producing assets.
So no, but you can still build a viable business from commercial real estate or I mean, dare I say it, food is the biggest issue as we go through this and I think people now understand what I meant by that.
When you go to the grocery store and the shelves are bare.
They're bare. Stuff isn't there because people are buying it, toilet paper.
I said right along, that's a great tool of barter.
Well, look at what happened with toilet paper.
I mean, it seemed silly in some ways, but it's the psyche.
And I have been so grateful that I've been preparing for all this time because I'm not going to tell you that I'm not a bit freaked out by the coronavirus, I am.
I'm home and I don't want anybody coming in, but I'm also taking this opportunity to make sure I have…
I mean, there's just a lot of opportunities to keep buying gold and silver as long as it's available, and it's probably always going to be available.
What's going to shift are the premiums.
That's what's changing, the premiums, although not everything is available.
I got to tell you. And look at where the price is.
Yes, the last couple of days, we've seen surges, but in reality, the demand has been surging now for weeks, surging, and yet we saw it lag.
You take advantage of that. But the premiums are expanding pretty rapidly.
Don't fixate on the DXY but daily CPI
George Gammon: Yeah.
I want to point out one thing and then ask you a final question.
I think so many people struggle with understanding the value of the dollar and domestic inflation, and I think it would serve them well to try to think of the dollar as two completely separate economies.
Or being involved in two completely separate economies that can layer on top of one another, but sometimes they can be mutually exclusive.
What I mean by that is you've got the DXY, so that's the dollar relative to other currencies and the demand outside of the United States.
You can very easily see the DXY go from 102 to call it 105 to 110, while at the same time in the domestic economy, in the United States, we actually see prices going up.
Because the main mechanism for those dollars to get back out of the United States would be through a trade deficit, meaning that we're importing more things than we're exporting.
In this case, we're exporting these green pieces of paper.
If we can't export those green pieces of paper, they accumulate in the United States potentially causing inflation here, while at the same time there's fewer dollars outside of the United States as you see the DXY go up.
I'm not saying there's obviously or always a correlation between the two, but those things can happen at the same time, which seems very counterintuitive to people.
George Gammon: So I want to make sure that people, your viewers, my viewers, aren't getting too fixated on the DXY and they're more fixated on the local CPI.
And not only the local CPI informed by the United States or measured by shadow stats, but as measured by what you buy on a daily basis.
For someone like myself or Lynette, our CPI probably isn't the same as someone who is living paycheck to paycheck. Not that there's anything wrong with that, but we just buy different stuff.
The percentage of our income that goes to certain things is drastically different.
So that school teacher that's making 35 grand a year and doing an amazing job, their price inflation or CPI could be 15% per annum while yours may be 3% per annum.
So I just want people to make sure to think about that. The last question, we talked about gold…
Before we do that, because you brought up the DXY, I want to tell you that in 2007, it was July of 2007, for the first time in history, the DXY fell below I think it was 80/40.
Against the other trade-weighted currencies.
That was the signal that something very nasty this way came. It was coming.
Then, of course, we had 2008.
And even though against those other currencies it has gone up because of the demand to issue dollar-denominated debt globally, if you look at a long-term chart on the DXY, you see the same thing as you do with interest rates, lower and lower highs.
So, the death of the dollar can actually be seen in the chart.
Even as they say that the dollar is so strong, and we have to stop that, because a strong dollar means fewer exports, at least in theory.
So you're right, we're exporting the dollar.
But I definitely wanted to point that out, because unless you're traveling, which nobody's doing right now, but unless you're traveling, that really doesn't have an impact on you.
It is indeed purchasing power that matters the most.
But look over here, don't look over here. No, you got to look over here, because that's where you live your day-to-day life.
So, I just wanted to say that that has been coming, that's been happening since 2007.
Do gold and Special Drawing Right (SDR) relate?
George Gammon: I think that's a really great point to look at that chart going back to 1981, and how the dollar is hitting highs, but the lower highs and I think that's very, very important.
So last question. You talked about gold. You talked about the SDR. How do those things relate to one another?
You talked about the central bank's buying a lot of gold, but then the IMF coming in with this global digital currency.
Are they related in the sense that that digital currency might be backed up by gold or are they two separate things?
And it's going to be gold is going to be priced in SDRs or how do you see that play out?
Lynette Zang: Actually, they are the flip side of the coin.
When people finally get disgusted enough and lose all confidence in the currency and the financial system, then history tells us that they will indeed put a component of gold in the SDR.
Just to get the people to trust it and use it, but the SDR is fiat.
It's a government decreed currency. Gold is a global currency.
It does not require any government to say it's money.
Everybody agrees and they have, for 5,000, 6,000 years, that it is money because it actually meets all the criteria to be money.
So in relation, they're both money, one is good money and one is fiat money.
Give me good money, because, with good money, I can always, always, 100% of the time, convert that into any good, service, or currency.
You give me fiat, maybe I can and maybe I can't.
When confidence is lost, Venezuela, their currency has more value as a napkin for an empanada, but that's not true with gold.
With gold, you can buy anything that you want because there's always a buyer, has the broadest base of buyer.
Fiat money just in one little area. Gold money broadest base of buyer and that is key.
That's how you keep your dry powder. That's how I am keeping my dry powder.
George Gammon: Yeah, that makes a lot of sense. Just to be clear, when I do go to Phoenix and visit Lynette, we are going to be eating empanadas off of a gold plate.
Lynette Zang: Well, I'll tell you something. First of all, I would love it if you would come and visit me here, and we will be having, I don't know about empanadas, because I've probably rather feed you something that comes from the property.
And I don't go corn, so I can't grow that or wheat, so I can't really create that.
But I did in 1970, let's see, that would have been in 1975, I was fortunate enough to get to go to college in Roxton in England and you know what I brought back as a souvenir?
A set of dishes that have gold on the rim.
George Gammon: There you go. So you've already got a lettuce wrap.
Lynette Zang: So, we will eat off of those when you come.
George Gammon: With lettuce wraps on your special plate.
Lynette Zang: There you go. Lettuce wraps will work.
George Gammon: All right, Lynette. So for any of my viewers or listeners who might not be familiar about what you do or about the products that you have or the information, where can they go to find out more?
Lynette Zang: Well, we have a YouTube channel, and that's where I put out my material, at least three times a week, and you could just put in ITM trading once you go to YouTube or you can Google my name: Lynette Zang, and it'll probably come up.
We've got a website, itmtrading.com, and although we're all, except for the administrative staff, still in the office.
Everybody is working remotely, but we deal in physical gold and silver.
Our wholesalers assure us that they can get plenty, but I'm going to tell you, you're not going to be able to be picky.
George Gammon: Right.
Lynette Zang: A month ago you could have been picky.
Today, I mean, honestly we're all doing it, you take what you can get.
So we can still get it, and give us a call 888-696-4653, and you can talk to somebody, you can go online, but we are here to be of service and everybody is just really working pretty much nonstop.
George Gammon: Yeah. All right, Lynette. Well, I sure appreciate your time and I cannot wait to do it again.
Lynette Zang: I look forward to it, too, George.