Ask Keith Anything, Part II

Ask Keith Anything

Thanks for all of those great questions you submitted! Watch Part I here. In Part II we cover questions on the risk-free rate of return, questions about Monetary Metals, Keith’s favorite Federal Reserve Board member, Lord of the Rings lore, and much more!

Make sure you follow us on Twitter, Facebook and LinkedIn and are subscribed to our YouTube Channel so you can submit a question and get it answered! Check out all of our audio articles, media appearances, podcasts episodes and more and make sure to subscribe to watch Part III.

A Gold Mine of Show Notes 

Monetary Metals Gold Basis

The Dollar Cancer and the Gold Cure

The Myth of Paul Volker

Tom Bombadil

Dan Oliver

Jeff Snider Euro Dollar

Brent Johnson

Larry White

Juan Ramón Rallo

Melchior Palyi

Antal Fekete

Menger Principles of Economics

Ludwig Von Mises

Henry Hazlitt

The Bastiat Collection

Says Law

The Wheel of Time Series

The Sword of Truth Series


Ben: Welcome to the Gold Exchange Podcast with Keith Weiner, where we untangle market and policy complexity using timeless economic principles. For show notes and archives, go to This episode is part two of our Ask Keith Anything series. Make sure to follow our social media and subscribe to our channel to stay up to date on all our great content. Now on to today’s episode.

Dickson: Okay, so I don’t know of a better way to follow up questions about inflation than to start talking about gold. And here we have a series of questions not only about gold, but that also cover some of what we offer at Monetary Metals. So here we go, Keith. The spot price usually refers to the local London OTC price comma, which is usually on an allocated basis. Does dealing on an unallocated basis inflate the supply of available gold and therefore depress the price? Second question, is this an issue for calculating the gold basis that comes from YouTube? Before you answer that, Keith, actually it might be good for those who are not familiar to just give me an overview of the difference between allocated gold, unallocated gold and some of the distinctions there.

Keith: So allocated gold means there’s a specific bit of gold that you have the legal title too, and it has a particular vault, particular location. And unallocated means you have gold on deposit in a bank. And I know there are big banking theories that think that when you deposit money in a bank, that means you own the money. But actually you have a credit, you have a relationship with the bank where they owe you that. Now, unless the bank is behaving with reckless abandon, they don’t take on the liability without backing it with an asset. So bank is going to have some form of gold to back that. But there is not necessarily the correspondence to say this bar and held it this fault on this shelf in this rack with the serial number, it’s yours. But the advantage to it is that so called unallocated reduces a lot of friction. You now can deal in down to the ounce or fractions of an ounce. You don’t have to worry about the fraction of what product is it and what is the premium on that product and all kinds of things that you would otherwise. It gives a greater utility to the gold versus the allocated.

But it’s simply not true that the way banks work is that you say, I want to buy $1,000 worth of gold or a million dollars worth of gold or a billion dollars worth of gold and then take your cash and do nothing and then spend your cash and then promise to, well, we’ll get you back somehow later, just not how banks operate. And if they did, they’d be first of all shut down by the auditors and the regulators and then secondly, they’d collapse anyway. So it’s simply not true that the bank can play out or stool out like a dog in one of those extended leashes, just playing out more and more. Gold, which is really fictitious, doesn’t exist. Or one of the other versions of this conspiracy theory is that they’ve sold each of the same ounces 100 times over. There are various ways of looking at it. Basically a very simple and obvious fraud. It’s not how the world works. There’s something very dishonest about the entire monetary system. But the nature of the dishonesty isn’t a simple and obvious fraud of that sort. So now they’re not creating endless supply to spill out and then soak up the demand in that sense? Absolutely not. That was one part of the question. What was the other part?

Dickson: I think the follow up was, does it come into play in calculating the basis at all? Calculating the Monetary Metals.

Keith: Gold basis, I mean, yeah. So the basis we get a price quote from a quote feed from it’s called Refinitive. It used to be Thompson, Reuters, and that is essentially all the big banks and other trading houses that’s their quotes, both their bid, in other words, if you want to dump some gold right now, that’s what you get. And the offer, if you want to buy some gold, that’s what you would pay right now. So that is so called London local London, so called. If you were to use something else, all it would do is you get a skew. So instead of London, if you wanted to use Singapore, what you’d see is the skew that the bid would be lower and the offer would be higher because it’s more expensive to deal in Singapore, you have less liquidity and it’s a far greater probability that at the end of that trade, the metal is going to have to get on an airplane to move. And there’s a cost to moving physical items of gold around. I mean, it’s not huge for ounce, but it’s something. So you see wider spreads. So that would distort the basis in a cobalt.

And then if you’re dealing with smaller, more retail products, you’d get an additional distortion, which will be cyclical, which would be the premium going up and down. So people say, hey, how could you say that this price is fake? It’s totally fake. I love when people use the word fake. Usually it means I don’t understand. And they say the price is fake. And what they’re saying is I’m paying $38 per one out silver Eagle because there’s a huge premium on the Silver Eagle. Yeah.

Dickson: Last I looked at her, over $40 over $40.

Keith: I’m obsolete with that. $40. So the price is fake. Well, no, it’s a real price. If you’re dealing in thousand ounce silver bars in London, if you’re dealing with 1oz silver Eagles in Kansas City, you might be paying over $40.

Dickson: So it’s fair to say that in the Monetary Metals basis and cobasis calculations that feed that you mentioned earlier that’s coming from really the hub of the gold market, which is based in London.

Keith: Right. Something like the basis you’re more interested in the trend than the absolute value. The absolute value does come into play when you see zero. It’s interesting how sometimes it does seem to peg at zero for a bit, and there’s obviously a resistance there for it to go beyond. But you’re really looking for the trend or the direction. So as long as you have something that had a consistent spread to London, you could use that and then you have a different absolute number, but you see the same trend.

Dickson: Right. Great. Okay, so questions about gold, but really, as it relates to gold and Monetary Metals. So here’s one from Jack that came in from the newsletter. My question is how do you guys make money on the gold that people invest with you? How does Monetary Metals make money and is able to afford the interest that it pays to clients?

Keith: That’s a very good question. That if only everybody in the world ask that question whenever they’re given a proposition, whether it’s conventional bank, whether it’s so called DeFi, whether it’s some sort of cockamamie Ponzi scheme, where does the money come from?

Dickson: It’s an important question.

Keith: Yes. And in our financial and monetary system, the problem is we use this term, the risk free rate of return. So after President Roosevelt removed gold from the monetary system, the most conservative savers were forced into treasury bonds. And then partly because of regulation, partly because of the culture was trending that way, everybody began to find the treasury rate as risk free, full faith in credit of the government, modern portfolio theory and all sorts of things are dependent on this notion of risk free. What did I say earlier about it’s not a theory, it’s a fantastical notion. Well, the idea of a return without risk is fantastical. I mean, I used to play Dungeons and Dragons and we would talk about this Dragon with a 150 foot wingspan and Wizards that could cast these spells and all that was a great deal of fun for a bunch of high school kids.

Dickson: As Dragons are to fantasy, so is the risk free rate of return to finance.

Keith: Something like that. So there is no such thing as a return without some kind of risk.

Dickson: Right.

Keith: You can quantify it, you can mitigate it, you can control it, you can insure it, you can adequately disclose it or fail to adequately disclose that, as the case may be. But there is a risk somewhere. Anybody selling you the idea of return without a risk is either a court economist who is selling the government’s propaganda in the case of the dollar or the case of some other sort of scheme they have some sort of nefarious end. It’s not possible. So what we do in our program is lease the gold, which is this is a physical thing. So the problem with the word lease, or the challenge with the word lease, is that a lot of people use the word lease in different things. So the bullion banks are involved in a leasing business of sorts. There’s something that the London Bullion Market Association used to quote at the global lease rate. And this is kind of a financial arbitrage kind of a thing. What we’re talking about is suppose you operate a mint and every day you’re buying X number of coin blanks and then you’re stamping them with various things and then you’re selling them at the end of the day, but at all times there’s 100,000oz of silver kind of in your pipeline.

So think of like an oil pipeline and you’re pumping oil from whatever, Canada to Houston, if they allowed it. No matter how fast or slow the oil is flowing, the amount of oil contained in that pipe is equal to the diameter of the pipe, times Pi times the length. And I’m just quoting here, basically standard high school geometry. Pi times diameter is the cross sectional surface area of the pipe. And then the length gives you the times the length of the volume. There’s always oil in the pipe and that’s the amount of oil. Well, the same thing is true in any flows business such as the mint. So by leasing the silver, we’re saying, okay, we’ll own that silver, we’re not their supplier, we’re not selling them silver, but it’s a finance transaction. We purchased that silver and lease it back. And every day the actual items are being replaced because they’re getting fresh coin blanks and they’re selling finish. But there’s always this example, 100,000 ounce of silver. So that’s what we call a lease. It is a physical metal as present, and we have the right on two days notice to be able to show up, scrape all of the metal, put it on a scale and it would weigh greater than the least amount.

That is the key feature of lease, that’s physically there. So what are the risks? Obviously, what if the owner is a rat bastard and decides to grab all the metal and pack his bags and fly to a non extradition country and steal the metal? Well, that’s obviously a risk. And what happens if employees steal it or fire happens or whatever? So you have insurance to cover various risks. You have all kinds of other things, background checks and personal guarantees and whatever. But you never say there’s zero risk, there is a risk of loss. We haven’t had any losses at Monetary Metals. We’ve been pretty careful about the deals we’ve done, but that’s not really answering the question. But. So there is a risk. That’s what we do. So how do we make money? The lessee who needs this is a finance transaction for them, and it’s also a hedging transaction to put yourself in the shoes of this business conventional way of financing. This is you go to a bank, if a bank would give you the credit, okay, I need to borrow money, as they would call it, to finance an inventory of 100,000oz of silver.

Well, today’s price, what would that be? Two and a half million dollars. So you borrow two and a half million dollars, you buy two and a half million dollars worth of silver, you’re in business. Great. Suppose the price of silver would have dropped, what, $5? Nobody wants to think about that, but it certainly could happen. Now it’s $20 silver instead of $25 silver, which is 20% drop in the price of the metal. So your two and a half million dollars of silver goes down to $2 million of silver. You owe two and a half million dollars. The liability doesn’t go away, but the asset is now only $2 million. When you go to your accountant at the end of the year and have a CPA review your statements, or especially if you get audited, they might say you’re insolvent your assets are less than your liabilities. So to avoid that problem, typically business like that would go into the futures market and hedge. So they’re selling the future short. No, this is not about increasing the supply. This is about they have physical ounces. They’re shorting silver for one purpose, which is to avoid the price risk.

And so now instead of borrowing two and a half million dollars, they need to borrow $3 million and put $500,000 in an account on the Chicago board so they can actually short futures. Then they have the problem, as we saw in nickel and also on wheat, you have two different problems. One, if the price of the commodity is going up, then your broker is going to call and say, please send more cash. It’s called a margin call, which is kind of bad. So now you have to go to your bank and borrow another $500,000 if they will give it to you and under what terms? And they may feel that they now have you by the we won’t say that word, but something painful. Then there’s a real loss, not just the interest you have to pay on the additional credit, but there’s a real loss there. What happened in wheat is kind of interesting. We went into a very big acquisition and so if you were short the May contract and wanted to roll it to December, I’m trying to remember what the percentage was. Now I have a friend who’s like following all these charts and I don’t follow the agricultural come out that closely.

It was something like 70% acclimation between those two months, which means to close the short position, you have to buy it and backwardation means that contract is more expensive than the December contract. So you’re buying May at, let’s say $15 and then selling short December at, let’s say $10. That’s a real loss. You’ve now locked it in. That’s not going to your bank to borrow more money that you can pay back when everything gets normal. Again, that’s a permanent loss of capital. And I don’t know a lot about the farming business, but I have to wonder if that is a greater amount, that $5 or whatever it was per bushel. If that’s a greater amount than actual profit to be made in forming wheat, I don’t know. So if you’re hedging, you have these two problems. One is if the price goes up, yes, you want the physical inventory, so you’re hedged, but you have to come out with more capital to feed the margin call in the short term and you’re going to pay more interest for it and your bank might get more aggressive terms on you. And then if it goes into backwardation, then you have real costs, real losses in your hedging.

And the same thing happened, of course, in nickel. The guy that was short all the nickel as a producer, it was a hedge. It wasn’t a bet. It wasn’t a speculation. And he would have been financially ruined, except for the exchange did what it did. And I don’t know whether he’ll be financially ruined or not.

Dickson: Yeah. Okay. Well, again, really great answer. There’s one missing piece I think that this question is asking, which is, again, you’ve done a great overview of how we do leasing, how we structure those transactions. But again, how do we make money?

Keith: It’s a finance transaction. The lessee he is happy to pay because getting the finance they need and the hedge and we take a fee out of that and what we pay the investors a bit less than what the lessee he pays. And so we make a spread in the middle.

Dickson: Right. So for example, if the lessee he’s paying five Monetary Metals.

Keith: Yeah, we take two and then pay the investors three.

Dickson: Got it.

Keith: We’re transparent. We work for 2% fixed spread.

Dickson: Great. All right. Few more here. How easy is it to convert gold to dollars and dollars to gold with Monetary Metals? And what kind of friction or losses can investors expect to move in and out of dollars in gold?

Keith: At first I’m going to be really cheeky. And the conversion is something that the beautiful Kings were paying the Alchemist to figure out and never did. You can’t take that piece of paper and turn it into gold somehow with a spell and I of Newton and all that. I think what we’re talking about is exchange. And the reason for being cheeky is that a lot of people think of converting things in the sense that the old thing goes away and the new thing comes there. But of course, the guy who used to have the gold now has the dollars and the guy used now with the dollars has the gold as the swap. So with Monetary Metals, we can provide that service. There is a bid ask spread. It’s not huge, but there is a spread. There is a bit of loss. We figure that if someone’s participating in a program where they’re earning two or 3% interest for some years, then that spread kind of shrinks into insignificance. But yeah, if you were to say, okay, here’s some cash, I want to buy some gold and then immediately turn around and say, you know what, the next day, forget about it.

I want to get my cash back. And let’s assume the gold price didn’t move one way or the other for that day. Yes, there is a loss. Not a big one, but there is a loss.

Dickson: Yeah, I can actually add some additional color there. These rates do move around with the market. But as of today, if you were to open a Monetary Metals account and were to wire funds to purchase gold, you’d be looking at all in cost depending on the volume. You’d be looking at about 70 basis points, all in. So less than a percent over spot price to buy gold. And that goes down depending on if you increase the volume of the investment. And then those rates tend to be around the same going in the other direction. So that’s selling gold for dollars, it’s about the same rate. Silver is a little wider. The bid ask spread in silver is wider. That’s the main reason for that. Any reader of Monetary Metals should know why that is. That’s because silver is the smaller market. It’s not as deep and as liquid as the gold market. So the rates for buying silver are a little bit more expensive.

Keith: Silver is less marketable. Wider bid ask spreads.

Dickson: Right. Okay, great. A few more here and then we’re going to get into the fun stuff. So question from YouTube, how safe is your lending platform? And can Europeans use your service too?

Keith: Europeans can use it and it’s perfectly safe and risk free, per my comments, just kidding. There is a risk. We pride ourselves on drilling all the way down to the very bottom and figuring out what the risks are and understanding and analyzing it, mitigating it, controlling it, insuring it, and disclosing it to the investor. So with each deal we do, we present a slide deck to the investor so you can look at okay, here’s the business, here’s what they’re doing with the gold, here’s how it operates, and here’s a list of all the bad things that we can think of what could happen to your gold, followed by here’s all the things we’ve done to make sure that hopefully the bad things don’t happen. I think it’s pretty safe. But as I said to the earlier question, can never say that such a thing as a risk free return doesn’t exist.

Dickson: That’s right. Again, one thing I might add to that, the way that we’ve set up the offering is that investors are in control if for any reason investor doesn’t want to move forward, they’re not obligated to. You can pass on a lease and wait for the next opportunity. All right, last question here. When it comes to opening a Monetary Metals account, does the metal have to be vaulted in Scottsdale, or can you accept the metal in a different vault? And that’s from Dale via email.

Keith: You know, true story and kind of a funny one. I was at a conference. There was a free market group that put on a conference in Jackson Hole, Wyoming, at the same time that the fed had its Jackson Hole conference. I think the idea was to hijack the Twitter hashtag of Jackson Hole or something actually worked. And I got some press.

Dickson: I feel like I remember this.

Keith: I actually believed that it was the real conference. Anyway, I met up with an old friend who happens to be a Monetary Metals client. And then several other people were just sitting there having beers at the hotel restaurant bar, and we were talking about, do you carry gold with you? And he took out he had four 1oz gold coins, as I recall. It was three Krugerands and a Maple that he had with them. And he’s passing around or whatever. And so they ended up in my hands. And I went to hand it back to him, and he just said to me, keep it. And there was a bunch of jaws around the table that all looked at him and looked at me were just like, now I knew, obviously he’s a client, which I didn’t feel I wanted to say. If he wanted to tell everybody he’s a client, that’s for him to say that. Otherwise, it’s not my place to break the confidence. So I just took the four coins and put it in my jacket pocket and sweated bullets entire rest of the conference on the way home. And I don’t want physical gold in my possession like that.

It’s a scary. Take them through the airport, have to go on the belt. If anything happened, I would have had to make good on it because he handed over. I could have refused it, I suppose. But in that moment, I made the decision to accept it and then paid the price in terms of for each ounce. I think I lost a gear of my wife just strapped over that in Scottsdale. We’re just in an office building, and we don’t even have a safe in the office. I mean, there’s no story gold here. So we partner with in the US, we partner with Delaware Depository, which is the largest non bank loss of precious metals. We also have relationships with Brinks, with TDs, which is the subsidiary of AMark, ABC, Bullion, and Sydney, Australia. We have a network of vault partners around the world. And the whole point of this network is so that people can use whichever is the most convenient vault either to where they live or to where their gold may be, which is not necessarily where they live. So we’ve had any number of transactions in Singapore, for example, from Americans and Europeans who didn’t want it at home.

And they picked Singapore’s jurisdiction. So, yeah, we’ve got vaults. all over the place. Do not send it to Scottsdale, please. I’ve already lost that life expectancy on that one. Don’t want it here. Can’t really accept it here. An insurance company would be pretty cranky if they found out that happened. But yeah, we have a process. We’ll give you clear and concise instructions on how to get the goal to where it needs to go and keep it in professional Depository custody.

Dickson: Great, excellent. All right, we’ve gone through a lot. We’re almost at the end. Everyone take a deep breath here. It’s about to get fun. So these last few questions,

Keith: Wait that wasn’t fun?

Dickson: Well, yes. Different kind of fun. Different kind of fun. We’ll get to see a little different side of Keith, I think. Alright, ready to go through these, Ben?

Ben: Let’s do it.

Dickson: Alright, you’re up first.

Ben: Alright, we’re now in the random questions and the fun questions section. What would you replace in God We Trust with on our currency?

Keith: Well, first, I don’t think there should be a government issued currency. I think that’s where a lot of the problems come in. The whole idea of having to print the word trust that we trust is kind of a sign that what is it when someone says, I’ll be honest with you?

Dickson: You know they’re about to be dishonest.

Keith: Yeah. Or they’ve been dishonest the whole time and now they’re going to be honest. The choice or something. I think a proper honest currency, if it was printed on paper, just simply say redeemable, who the issuer is. And obviously you have serial numbers and security features and all that. And a picture of whatever engraved image. And then it should say redeemable for this amount of gold. That’s all deal. Trust really shouldn’t. What did Margaret Thatcher say? Having power is like being a lady. If you have to say it, you don’t have it, right? Something like that. If you have to start putting trust on there, you’ve already lost it.

Ben: Right? Okay, I think no surprises there. And they remind me. I’m pretty sure Google’s brand name and logo used to have Don’t Be Evil on it. And unfortunately they had to take that away. Which makes you wonder, did they do it because they had to be evil or… probably not a good way to start your brand off.

Dickson: I was thinking if I had to place a bet on the answer to that question, I thought you were just going to say replace God with gold and gold we trust. But I like your answer better.

Keith: Okay, that seemed like the set up. The pitcher has walked forward five or six steps from the mound and is tossing the ball like this. And you’re like, right.

Dickson: Moving on. What’s your favorite state cut and why.

Keith: Either a ribeye or Tomahawk? Okay.

Dickson: Difference between a ribeye and a Tomahawk is it just a bone?

Keith: Tomahawk is the bone. Tomahawk tends to be a thicker cut. Okay. So you get sort of a better ratio of juicy meat to burnt crust for lack or better word.

Dickson: And Keith orders his steak medium, medium rare?

Keith: Medium rare, but probably on the rare side of medium rare. I definitely want to see some. I always say to them, I want to see some red in that thing. I think the ribeye just has the right balance of marbling and therefore flavor. I don’t need to stay careful. What is it? The most interesting guy in the world. I don’t eat steak very often, but when I do, it’s a ribeye.

Dickson: I like it.

Ben: All right, Keith, you’ve published articles. You’ve been in a ton of videos, interviews. Do you have any plans to ever write a book?

Keith: I do. I think there are several that I need to write. I gave a talk by this name, Dickson you were there in New York at the Harvard Club called A Dollar Cancer in the Gold Cure. And I want to, in that book, integrate all of my ideas about how the dollar is failing and how gold wouldn’t fail and then what the transition path is. Beyond that, I think that I’ve developed probably half, maybe less of what I think is a proper introduction to a field that I think should be called monetary science. So beyond that, I’d like to write a more scholarly book called Introduction to Monetary Science. And then the approach that I’ve taken, having studied under Fekete who really went back to Menger. Menger developed a bit, and they offer as a concept the Austrian School kind of acknowledges it, but kind of goes in a different direction. So I’d like to write a book on the Arbitrage School of Economics almost. That’s kind of an ambitious thing. That’d be a lot more work. I think the other two books I kind of largely have in my head at this point, but to try to write about kind of a different approach to economics, that’d be a bigger project.

So maybe the first two are when Monetary Metals is growing, and then the last one is in retirement, whatever that may be, if there is a retirement for me.

Dickson: Awesome. All right. Speaking of monetary science, this question is, aside from yourself, are there any other monetary scientists that you would recommend, any other gold standard advocates that you would recommend?

Keith: Yeah, I think I have some ideas in common with Brent Johnson. Brent Johnson for the milkshake theory. Jeff Snyder talks a lot about the Euro dollar. And what’s interesting about that is if you drill down and I really appreciate sort of the study of the mechanics and going deeper into the depths, most people just hold all these ideas as a floating abstraction. And he goes in and looks at what the banks offshore and not regulated by the US regulators, what they can do and how that differs from the onshore banks. And that’s the so called Euro dollar. And I definitely would have to mention Dan Oliver, if there was a school of monetary economics that openly and explicitly rejected the quantity theory of money and openly touted or promoted the quality theory of money. So Dan, if you’re listening to this, I haven’t necessarily obtained your consent for saying this, but I hope you would agree with us that he would be a fellow traveler in the quality theory of money camp rather than almost everybody in the world, even the people who don’t explicitly tout the quantity theory. Almost everybody is a quantity thinker.

And Dan is one of the guys who knows what a Real Bill is. He’s got a lot of interesting things to say. So I call him a fellow traveler as well.

Dickson: That’s great.

Keith: When I wrote my dissertation for the new Austrian School, there were two examiners. So the professor who was my dissertation advisor was Professor Fekete, but there was another examiner and that’s Professor Juan Ramon Rallo of University Juan Carlos in Madrid, and I think he shares a lot of the similar ideas. I know he had a debate with Larry White about real bills. I really wish I could have added something to it because I would have said it in a bit of a different way and perhaps have been a little more persuasive to Larry White. I would also have to add Larry White to the list as I consider him to be almost the godfather of the modern free banking movement and contributed a lot to that. The things we take for granted that people kind of understand about free banking. I think he gets a lot of credit for reviving an idea that was considered to be old and dead.

Dickson: That’s great. So this next question is kind of a piggyback on that. And you’ve actually already provided some of the answers, but asking about recommended reading. So you mentioned Larry White, Juan Ramon Rayo, Dan Oliver. Any other authors that you would recommend?

Keith: I would recommend Fekete, especially his older work. The problem is he writes a lot in mythological allegory. They’ll talk about Chimera and Chardis, and Gordian knot.

Dickson: Oh, Gordian knot, yeah.

Keith: And biblical things, but also ancient Greek, Roman, Egyptian. I mean, it’s not easy to read and it’s not easy to get the sense of what this really means or why he wrote it, but I definitely recommend that. And then of course, the classic the good guys: Menger. Absolutely. Principles of economics, Geld, Mises, how can you not recommend Mises, although with qualification, I think his understanding of money is a bit different. And I have some disagreements there has Hazlitt, of course, Bastiat, of course, of course Say’s law should practically be an Axiom properly understood.

Dickson: There’s another good one. I always get the name wrong, but specifically on the question of money, it’s melchour. The last name starts with the P. Do you remember that one? Yeah, there’s not a lot by him, but he has an essay or two on money. That’s good. I can dig it up.

Keith: A lot of interesting things that are out there. And it’s like how deep down the rabbit hole you work out. Do you want to become a scholar? What’s your ambition with it?

Dickson: Right.

Keith: I think for a general purpose podcast, I probably put more things on the table then.

Dickson: Yeah, no, that’s great. That’s a great list. If anyone gets through all those authors, you’ll be in a good spot. All right, Ben, you’re up next.

Ben: All right, Keith, I’m dying to hear this one. You’ve just been named the chairman of the Federal Reserve Board of Governors. Congratulations. What is the first thing you’re going to do?

Keith: So for everybody who’s read the novel Atlas Shrugged by Ayn Rand, they tried to offer John Gault the position of economic dictator. He says, I refuse. They said, we are going to make you do it. He says, okay, and what’s your first order? And he said, my first order: Shut it all down. If there were to be a government position that would be more appropriate for me to take, it would be Secretary of the treasury. So from within that role, assuming I had a mandate to do it, one could and it would be a process. You can’t just declare it. You can’t just say end the Fed. That’s kind of a bit more than a bit naive. There would need to be a process of how you go about doing that without grave disruption. And I think I could do that from the possession of Secretary of treasury. Again, assuming there’s a mandate. Otherwise it would just be hardly political. It would all be bogged down and I wouldn’t accomplish anything. I wouldn’t take the job anyways.

Ben: I guess related question, which might be difficult, but who has been your favorite Federal Reserve Board member and is this kind of myth of Paul Volker, is he overrated?

Keith: It’s kind of like asking me what’s your favorite illness? There was a time that I was sick to my stomach. I couldn’t hold food down for three days. There was that hangnail that plagued me. No, I don’t regard them as heroes at best. And Volker surely fits this position to a T or this comment to a T. Then you get lucky and happen to be in the right place at the right moment when something happens that actually isn’t good at all but is widely acclaimed to be good because everybody loves a boom, a false boom. And he happens to be his guy. He happens to be the wizard of Oz, the little powerless punk behind the curtain at the moment when the rising interest rate so after World War II, the interest rate begins rising, causing all sorts of calamity, including rising prices and misery index and all the things in the 1970s. And then it turns around in 1981 and he happened to be the guy with his hands on the microphone at that moment. And then everyone says he fixed inflation, which he did not, and created better economic times in the sense that a false boom is better economic times than the misery of a rising interest rate environment.

And everybody acclaims him and of course, Reagan for that. I find myself in the position of number one, he really shouldn’t get credit. And number two, it’s not really something to credit anyway because it isn’t actually a good thing. But how do you argue with people and say, yeah, that decade that seemed good wasn’t? Well, it’s the false boom. Everybody loves the boom times, right?

Ben: Good answer.

Dickson: Alright, not to say that the questions we’ve had up to this point have been bad, but I do feel in a way that we’ve saved the best for last year. All right, it’s time to get into some Lord of the Rings questions. And the first one is a great one. Such a good question. Okay, here we go. Who and what is Tom Bombadil?

Keith: Oh, wow. You’re going to test my Tolkien scholarship. That’s my understanding. Tom Bombadil was a Maya, I guess, for the benefit of the audience. So in the beginning there was Eru Illuvitar, The One who then started to create this music. And out of that comes the greater gods, the ones that rule Middle Earth and rule in basically heaven, which is Valanor. And then there’s a much larger number of lesser gods, which are the Maya, so they’re immortal and you see several. So the Wizards Gandalf and Saramon, I’m sorry, Sauron is also the Balrogs are Maya, and I believe Tom Bombadil.

Dickson: Well, we’ll have to fact check that. I’m not entirely sure.

Keith: This is going to get good. Don’t cancel me bro.

You know, he’s a man of mystery . He’s referred to, I think is the oldest being of Middle Earth, and I’m pretty sure that’s in the books. I don’t know if he’s a Maya, though. I’ll have to go back and check that. But it was a great answer. You got into the Silmarillion, you got into the making of Earth. I award you five stars. It was excellent. Okay, who is your favorite Lord of the Rings character and why.

Keith: In a certain sense, I have to say Feyanor.

Dickson: Oh, wow.

Keith: Okay. All right. Creator of the Silmarils because he was so badass, but he was also so arrogant and such an idiot and did some things that got very destructive.

Dickson: I feel like we’ve started in the deep end of the pool and we need maybe to work our way towards the shallow end. So maybe from the trilogy, your favorite, like your fellowship, Two Towers return to the King, who’s your favorite character in the trilogy?

Keith: I kind of have to go with Frodo in the sense that he has this burden which leads to this quest, and he feels like he’s the one who has to do it. And I see significant parallels to what I’m trying to do with Monetary Metals, especially in the early days. It can be kind of lonely and certainly not glamorous, and you can’t really contemplate just okay, I’ll just drop the ring over here on the side of the road, hope it works out. So in that sense, I relate to Frodo.

Ben: All right. Keith, works of fantasy or literature that rival Lord of the Rings, in your opinion, are there any?

Keith: I would have to say the Wheel of Time series by Robert Jordan and the Sort of Truth series by Terry Goodkind. Kind of have that epic scope to them in different ways.

Dickson: So I’m familiar with the Sword of Truth. But Wheel of Time, can you give us a quick synopsis rundown or is that something we should Google?

Keith: I don’t think I could possibly anybody could possibly give a quick Robert Jordan was, shall we say, verbose. So he died before the end, but all his notes were there. And so they hired another author to kind of work with his wife and his Secretary to finish. I think it’s $13 or $15. Amazon has now just made season one of A Wheel of Time on Amazon. So if you have an Amazon Prime membership, I think it’s free. It’s an epic and grand world and all kinds of stuff going on. I think Robert Jordan must have created thousands of characters that have names and stories and arcs and all kinds of things. The very rich tapestry of a world. No, there’s no way I could possibly.

There was something I remember on Facebook years ago, this game of, like, take your favorite movie, your favorite novel, and tell it badly in a paragraph. It’s like Lord of the Rings: A guy inherits an antique piece of jewelry and decides to drop it into a volcano or something like that.

Ben: We’ll spare the Wheel of Time.

Dickson: Yeah, that was good. I mean, that was helpful. I actually do have a better sense of what it’s like. Okay, last one on Lord of the Rings here. There are quite a few well known founders, most notably perhaps Peter Thiel, but also Jeff Bezos, that happened to be huge Lord of the Rings fans. In Peter’s case, you can see it all over the names of his companies. Right. So you’ve got Palantir, Valar Ventures. There’s apparently even a rumor that he refers to Founders Fund as his Precious. That would be amazing if that’s true.

Keith: From watching the movies. But they had a real Tolkien scholar advising them on pronunciation that is pronounced here. I always said it Palantir. In my previous company, we have a server product that we call Palantir.

Dickson: Okay.

Keith: Years before Peter Thiel did his thing. But in the movies, they say it is Palantir.

Dickson: Okay. That’s news to me. So, yeah, the question is, do you have an opinion or why do you think that that story is so popular amidst that demographic? Is it correlation, or do you think there’s some causation there? That these incredible people that have literally changed the change the world that we live in happen to be such huge Tolkienites?

Keith: Well, I think the trade answer is Tolkien is very popular. So there’s an awful lot of people in every walk of life that are fans at Tolkien. True. You know, back in the 1960s, people were spray painting Frodo lives in the New York subway system and all this stuff. People were writing to Tolkien and saying that they had their weddings and elven themed things or whatever, which he hated. But I think two things. One is the books, if you read them in serious literature, there’s the superficials that are fantastical level, but they’re serious literature. They do aspire to be high art. They’re not some dime novel kind of trash touch on real human themes, obviously, death, hope, despair, really big kind of things.

Dickson: Right.

Keith: We live in this world. We call it modern, but modern in literature and art is kind of the disintegration of everything that makes literature and art great. So we live in a world. It’s like nihilism and grungy. It’s hardly art anymore. It’s almost more like journalism. It’s like just a recitation of the facts with no particular theme or worth yet a movie where there’s no one particularly heroic, everybody’s a bit dirty. You think so? And so like, Game of Thrones became really popular and it’s like, who would you really cheer for in that it’s just a giant soggy mess? And Tolkien stands out as something that is modern since the 20th century, but it aspires to something heroic. It aspires to show man as he could and should be striving for something, obviously, amongst very difficult circumstances which are fantastical in their origin. It was a dark Lord with a magic ring and Dragons and stuff, but the principles and the virtues and the themes and all that are very universal. And so I think there’s almost nothing else really in the past  100 to 120 years that would rival it in that sense. So, yeah, I think a lot of people gravitate to it and rightfully so.

Dickson: Real evil and real good, but told through a fantastical landscape and architecture and narrative.

Keith: Right.

Dickson: Well, I think that’s a pretty good place to end. Let not your hearts to be troubled, dear Monetary Metals, companions, because just like Gandalf, we will return for part two of Ask Keith Anything. I want to thank you, Keith, for the time that you’ve given us. Thank you, Ben, for letting me co host with you. We have a lot that we’ll be putting in the show notes for this episode, so be sure to check that out. This video is going to go on our YouTube channel. It’s also going to be in our podcast format so if you’re listening on Spotify or SoundCloud or wherever you listen, make sure to check out the video to see Keith’s reactions to the questions. They’re good. Yeah. Thank you so much and we will see you again.

Keith: Dickson wasn’t kidding. This was my first glimpse of the question. So you’re seeing it you’re seeing it live on my face and in my voice.

Dickson: Uncut unfiltered. Just as it happened so it was a lot of fun. Thank you all everyone and we will see you again on the next episode of The Gold Exchange podcast.

Ben: Thanks for checking out this Ask Keith Anything episode of The Gold Exchange podcast. Make sure to follow all our social media and subscribe to the channel to watch part three. See you next time.

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