Shifting Sands: How AI Could Change Retirement

MIKE BARNES 0:10

Welcome to America’s Gold Authority Podcast. My name is Mike Barnes. Financial anxiety over AI. Could it determine when you’re going to be able to retire? That’s our topic today. Let’s bring in a couple of experts and talk about that. Brad Chastain and Philip Diehl join me now. And Philip, I want to start with you. As the 35th director of the United States Mint and president of U.S. Money Reserve, you’ve seen a lot of financial anxiety through the years, but how does this compare? Because people who thought they were going to retire at 60, 62, 65 now say, whoa, I lost my job in my 50s. I’m going to have to work until I’m 70 just to catch up.

PHILIP N. DIEHL 0:45

There are so many questions that have been raised by AI. And some of them, some of them are very promising. I have uh used AI in my work, and I’m just knocked out by uh the power that is at my fingertips. And a lot of the people who I know who have worked uh have been using AI as part of their work have a similar impression. However, there are so many downside questions and potential from AI that it has many, many people concerned, and not least of which is uh how fast the data centers are being built and how disruptive that is to water supplies and energy supplies and prices, noise pollution, and the like. So there are so many questions, uh both in the short term and the long term. One of the big questions, of course, is uh what the impact is going to be on employment. And uh again, there’s a big debate on both sides of this. I am personally convinced that, and it’s not just that I’m persuaded, it’s it’s really that I’m convinced by what I’ve seen that there’s going to be uh tremendous disruption in the labor markets caused by AI. And I think it’s coming sooner rather than later. Now, later on, uh it may very well be that, like with other groundbreaking technologies over the course of history, that there’s a transformation that occurs in the workplace and many, many more jobs will be created as a result. Uh, I think I think that’s a reasonable uh guess about what’s going to happen. But in the short term, I think it’s gonna be uh very disruptive. I think uh a lot of people, especially young people, unfortunately, who uh expected to have secure employment futures uh in coding or uh in elsewhere in the industry and management are gonna discover that those those kinds of opportunities are gonna be fewer and farther between between because uh AI is so uh even the current generations of AI are uh are already so uh efficient at producing coding. And uh as new generations come forward, what it seems like every six months or so the capabilities of uh of these models increase. So um but uh there’s there’s one thing I do want to talk about a little bit. I want to talk a little bit about AI before we get into the details of the implications for individuals’ uh retirement plans.

MIKE BARNES 3:31

Brad Chastain, with all the research you do for U.S. Money Reserve, you’ve probably seen this, but a study just this month in July of 2026 by Boston College revealed that AI is already, already pushing workers age 55 and older out of the workplace prematurely. And that has to affect a lot of plans, not only for right now, but for their future.

BRAD CHASTAIN 3:52

Yeah, absolutely. I and I agree wholeheartedly with what Philip just said. I think short run, the disruptions seem to be obvious. Um, more, there’s plenty of studies already showing that the more jobs are being displaced than created at this point in time. And I agree that down the road, as more companies figure out how to use AI, as it does lead to more profitability and productivity in certain areas, that you’ll see a shift and more jobs likely created down the road. But that doesn’t mean folks are properly trained at this point in time for those jobs and the and those jobs don’t necessarily exist yet. And so that disruption is um is absolutely happening at this point in time. So short term, it it looks like it’s gonna be a pretty rough transition there. So definitely people need to be prepared, and like we always talk about diversifying and preparing their retirements accordingly.

MIKE BARNES 4:46

Philip, I want to ask you if go back to the 90s, I know it was a long time ago, but some of us remember the birth of the World Wide Web. And I remember at the time so many people were just so excited about the internet. Look at all this fun stuff, but look at how many people lost their jobs because of that in so many different sectors of life. And I think a lot of people are fearing the same thing now with AI. You think that’s true?

PHILIP N. DIEHL 5:11

Yeah, I think there’s something to be learned from looking back at the past, and especially in the era leading up to the dot-com crash and uh the years that followed. Uh, I do think that AI is a fundamentally more transformative technology than uh the internet was. Uh, I think this is something closer to being on the scale of the industrial revolution. And we’ve seen uh other, I’m not the first one to make that comparison by any means. Uh I think the thing to bear in mind is that the industrial revolution rolled out over the course of about 150 years. Uh the AI revolution is rolling out over the course of maybe as long as a decade. I think the really transformative part of it will probably come in in five years. So it’s an enormously more disruptive technology, even than uh the industrial revolution is. And one of the things we’ve heard about so much is about the Mag 7, the magnificent seven stocks uh companies that include the so-called hyperscalers. Those are the people who are, those are the companies that are going into capital markets and raising an enormous amount of money. Uh over the course of 2025 and this year, by the end of this year, they will probably have borrowed a trillion dollars in capital markets. Just unheard of numbers. They and the magnificent seven stock, they’ve been the darlings of Wall Street all over the world, and they’ve just uh their their uh stock prices have gone through the roof. But I’ve created a a graph here that I I want to uh point to just real briefly to show you how even this part of the market has made a major transformation in the last year. In this graph, what you see is uh you see the lines tracing two different parts of the AI industry. One is the Mag 7, which is represented in the blue line, and the other are the so-called Pixovels companies, the companies that uh hyperscalers use their services and their equipment to produce the AI intelligence that we use today. And the analogy here is uh to the gold industry, the gold mining industry back in California during the uh California gold rush, the people who went out there to do the mining uh would be the people uh represented by the blue line, and the people who sold them the picks and shovels by which they mined uh would be the black line here. And what you see is that from one year ago until last fall, those stock prices of those companies were moving together. But beginning in September, the Mag 7 hyperscalers they flattened out and even began to decline in terms of stock market value. And the picks and shovels companies have gone through the roof. A lot of people are pointing to this as a possible kind of late stage development uh that uh in the in the case of the Gal California gold rush, uh the guys who were not able to sustain their business uh in mining gold um lost their shirts and those mining communities uh collapsed because of their inability to sustain their their businesses. But the picks and shovels companies survived because they can sit continued to sell to other miners elsewhere in the gold region, and they were able to transition into other industries as well. This is just one way in which we’re seeing uh the AI boom and the AI industry transition in really fundamental ways, and that’s just within the industry itself.

MIKE BARNES 9:26

I’m glad you brought up the picks and shovels because that not only is it interesting, but it brings up the stock market and investments. And Brad, I’ve seen something this week that was very interesting to me is that with AI, a lot of people are using AI to determine how they’re going to invest their money, how they’re going to plan for their retirement. And the AI sometimes is wrong. They’re not using the people they should normally use. Is that a fear for a lot of financial planners?

BRAD CHASTAIN 9:52

Um, I don’t know how much financial planners are even uh thinking about folks doing that, but um I, you know, I’ve been into technology for a long time and understanding how AI works, it’s terrifying to me that people would be doing that. AI essentially synthesizes information. It’s predicting what the most likely answer is based on a tremendous amount of training data out there. So, one area where AI is just wholly inadequate still is predicting the future and being able to come up with new ideas and things that our brains do, um, because it’s ultimately a set of probabilities or weights based on what the most likely answer is to a question based on all of the data that’s out there. So if the data out there is not accurate as far as what’s going to happen, AI is inherently wrong because that’s the data it’s trained on. It’s just the wrong tool for that sort of thing in general. It’s probably pretty good about answering psychological questions about investing. If somebody were to ask, you know, about things like diversification and how they should think about downturns and things like that, it’s probably pretty good because there’s gonna be a lot of training data out there around the psychology that it’s probably pretty good at predicting what the appropriate answer is. But as far as predicting the future at this point in time, uh it’s not what it does. It’s not how it’s designed, it’s notoriously bad at it. Um and just to go a little bit further on the that what Philip was talking about as well, because I think this is really important. I don’t think people understand quite how exposed they are to what he’s talking about with hyperscalers and how vulnerable that system really is. Because what he’s talking about as far as the picks and shovels, the Nvidia’s and chipmakers and memory makers and things like that, um, one of the things is yes, earnings are really strong for them. In fact, if you look at what what they call, especially in the the hyperscaler, uh the mates or the really Googles and Amazon Web Services and Oracles and things like that that are building out these data centers, they have a tremendous, like two, two trillion dollars of what’s called backlog, it’s future order from the um from the AI labs like OpenAI and Anthropic in the future that they’re already booking as revenue. But those companies are not actually profitable. They’re losing a tremendous amount of money. The money that they’re putting into that is one credit from the hyperscalers to promise that they’re going to buy things in the future, and investment from hyperscalers like Microsoft and the chipmakers, NVIDIA has made investments in companies like AI, uh, OpenAI. So you have this circular revenue system that the markets are looking at future growth, future earnings based on all of the orders that these hyperscalers have in the future, and even the chipmakers and the and the uh uh other picks and shovel businesses, but it’s very circular. It’s their own investment coming back to them in revenue. And the dangerous thing is that that, by definition, has to accelerate for earnings to continue to grow. And right now, if you look at the prices of these companies based on where they where people project their future earnings, you could argue they’re reasonable. PE ratios are high from a trailing standpoint, but from a future standpoint, they’re not unreasonable, but it’s based on those earnings coming through. And right now, the earnings, because it’s so circular, it’s coming internally. Um, and the hyperscalers are taking on a tremendous amount of debt uh to build out as well. So if that slows, those earnings, that earnings growth slows, then PE ratios going forward are wholly wrong. The denominator in that equation um ends up you know collapsing, making those forward PE ratios probably wrong. You could see a severe repricing. So while this is absolutely to Philip’s point revolutionary, it’s transformational. Um, from an investment standpoint, we often talk the economy and markets aren’t the same thing. Um they are different. Um there it is a very precarious situation because right now we are not seeing the revenues coming into OpenAI and anthropic to be able to justify what is being put into these future orders that are being priced into these companies. And we see a lot of pressure there. We see um pressure from you know the Chinese models that are coming in and providing that inference for a cheaper price for companies. So that’s cutting into um what they’re going to be able to make as companies go to cheaper stuff. The biggest AI demand companies that have really put it to use, being the technology companies and coding, have been cutting back on their AI costs for a while. They were rewarding people for using as much AI as possible and spending as many tokens that are costly as possible, and they were not getting the returns on those more expensive. And as cheaper models have become available that do a pretty good job, they’re shifting towards these Chinese companies. So the ability for these OpenAI and Anthropic to be able to meet the future demand that’s already priced into these both hyperscalers and pick and shovels businesses going forward is um it is hard to see how that that ends well. Um but much like the dot-com where people can see the problems, a lot of people, as we’ve talked about before, went bust trying to guess when it was going to bust. It could continue for longer than people expect, but it is uh a dangerous situation, especially given the concentration, right? The Mag 7 at those hyperscalers, large part, make up a third of the S P 500 index. If you look at the overall AI-related trades in our companies, it’s about 45% of the index there. And if you look at the Nasdaq, it’s a lot higher. The technology companies is about 70% or so. So people that think they’re diversified, we just talked a little bit about being diversified going into retirement, aren’t nearly as diversified as they think. And it is in a very precarious situation in terms of the concentration of being AI that has really been the driver of the economy. I mean, we’ve got a relatively strong economy from a PMI standpoint in terms of expansion of manufacturing and services, but the economy is not the market, once again, and and um most of that has been driven by all of this capital expenditure spending into AI. And right now, though that circular structure means that has to continue to accelerate in terms of that internal investment and future order demand. Uh and eventually for it to be sustainable, you need outside revenues coming in to keep it going because the internal acceleration that has to take place to justify these prices just simply can’t continue. And so far, we don’t see the external and we actually see price pressure on that external piece. So be very careful when you see capital expenditures start slowing or you see internal investment start slowing and valuations coming down on these um these kind of companies because that could be a big spiral that really has a significant impact for markets and portfolios, uh the like.

MIKE BARNES 17:10

Philip, are you seeing the same thing? Are you worried about something kind of similar to the dot-com crash back 25 years ago?

PHILIP N. DIEHL 17:17

Brad has really drawn the picture well here about what the where the risks are. And the market is beginning to show concern about those risks. I mean, it was sort of a madhouse until last fall. But this graph that I just pointed to shows the impact of these questions on the values that are being given to these hyperscaler Mag 7 companies. Now, the thing that’s really remarkable is that these are really big companies that have huge lines of business outside of AI. Uh and their market valuations are now being uh weighed down by the uh the level of commitment they have, the sunk costs that they have in AI. And what happens when you have deep sunk costs like this is that there’s a tendency, especially in financial markets, to throw more money at it. And at some point the market begins to say, wait a minute. It’s okay if you throw somebody else’s money at this, but I’m, you know, I’m getting cooler about you throwing my money at it. And that’s what we’ve seen since last fall, is that the value of the hyperscalers uh and you know, companies like Google and uh and uh Meta and Amazon, uh, these huge companies, their stocks have leveled off and have slipped some while the uh bricks and mort mortar companies uh are uh are taking off. So there’s already warning signs, very clear warning signs in the marketplace um of and growing uncertainty about how does this end well, like Brad said. Does this end well? And the reason why I think it’s more uh more of a threat to the economy, and not just the world economy, uh the US economy, but to the wider world economy as well, is that this is a feeding frenzy well beyond what we saw leading up to the dot-com uh crash. And the companies that were really impacted by the dot-com crash were not these large, huge companies. There were some telecom companies, certainly, that were hit hard, but they didn’t represent, like Brad was saying, 50% of the SP or 70% of the NASDAQ. This is a totally different scale. Also, the other thing is that people talk about how, well, you know, what happened was a lot of the dot-com money went into fiber, laying fiber in the ground. And that became dark fiber after the dot com uh collapse. Um, and dark fiber meaning basically it was just fiber that wasn’t used, but years later, some years later, that fiber was be able to be put to use. And there are other analogies like the railroads where overinvestment in infrastructure was later used, it wasn’t wasted. That is not true with AI. And the reason is that all the money that’s being pr that’s being invested into these AI models, and you think a model, how expensive can that be? Oh, it’s enormously expensive because of how much it costs to train them, the power that’s necessary to train them, that these AI models and uh and the chips that are used to run them have a lifespan of in some cases less than a year, maybe two or three years. So the proper analogy would be as if the dark fiber fell apart between uh you know, in a year or three years and was totally unusable by the time it could have been used. And there’s gonna be tremendous uh uh pressure on these companies to find more efficient uh models and more efficient uh uh chips uh because uh of the tremendous power uh usage and the expense of power uh in running these models and these systems. So I’m not uh reassured at all by the comparisons to the dot com crash and how eventually we came out of that uh smelling pretty good because all that technology uh was usable later on. I I don’t I’m not convinced that’s the case at all here. Um I think what I I’d like to do is kind of shift our attention uh a little bit to what the direct implications are for people who are in the workforce today and are saving toward retirement or for family uh for family wealth uh and for those who are in retirement or near entire retirement now Brad I want to follow up with what you and Philip have been saying because I’ve seen a couple of stories about some AI companies in San Francisco that apparently are doing so well they’re almost worth billions of dollars.

MIKE BARNES 22:42

And the employees there are ready for the stock to go public because they’re in their 30s and 40s. They’re going to retire with millions and millions of dollars. But are those the anomalies we’re not going to see many companies like that with AI companies. Most of them are going to have more trouble kind of like dot-com companies did 25 years ago.

BRAD CHASTAIN 23:00

Yeah that’s likely to be the case even those are having problems I think you’re probably referring to open AI and anthropic if if I were to guess because they’re being valued at trillion dollars plus potentially in um IPOs. And even those are um you know becoming a little bit more precarious. I mean those are the ones that I’ve just literally described in the model that need to see this outside revenue to keep that sort of loop going and higher earnings going because the um some of the hyperscalers and chip manufacturers like NVIDIA have been investing in those and that’s what’s the circular. Those are the labs that I’m talking about. And they don’t have the revenue they’re losing a tremendous amount of money. A lot of people are using their services but they are very very far from profitable. OpenAI actually delayed their IPO. They were supposed to go public this year and they pulled it back. And you know if you were to look at the situation it looks like there’s I mean a good chance they ultimately were not going to get the public valuation that they ultimately needed to justify all of the spending that they’ve ultimately had in the past. And and when you bring a company into the market the market determines value and pricing. It’s very different than in the private sector where or private investment coming in and setting high valuations for that. So if you look at OpenAI’s valuation growth since they’ve been private, it’s actually been decelerating it needs to basically be accelerating and and um and while it has become much more file the growth is still strong what matters is that acceleration or deceleration of growth and the growth has actually been decelerating. So even coming in at about 1.1 or whatever trillion they were thinking it might come into that is a significant drop in the acceleration of that growth and if they let open AI into the public where market starts determining valuations, it may be very, very difficult for them to raise the type of capital that they need in order to continue the level of spending. And so I think the the pause on OpenAI there for those folks that you’re even talking about right now is kind of one of those canaries in my mind that this the acceleration that we need to see to justify these prices in the future across the board is is um is starting to to slow.

PHILIP N. DIEHL 25:25

Again so much anxiety out there and Philip as you mentioned Social Security is just adding to the anxiety as well what we need to remember is that our retirements are to a degree funded by our own work. But uh whether we’re talking about Social Securities or pension funds it’s a significant part and especially in Social Security a significant part of what generates our benefits is the work of younger people still in the in the marketplace. This is sort of a way of paying it forward and we did it with uh our parents and we as we worked uh and as I continue to work uh I am paying for older people’s uh and and even younger people’s Social Security benefits who people who are younger than me who are on Social Security and receive the benefits that’s been the way the system was built from the very beginning this is nothing new. What is new is that it’s more uh more that way today the other thing that’s new is that there are a lot more older people on Social Security than there are uh people working the ratio of people working to uh people on on uh on receiving benefits social security has changed radically so each individual who’s working is carrying more of the burden for those of us who are not working um and this has led to a dynamic in which the Social Security trust fund out of which the benefits are paid uh is declining in terms of the number of years the trust fund can remain solvent before it hits that zero line of now the zero line that doesn’t mean the trust fund is empty it simply means that there’s not enough money coming into the fund to pay for uh all of the uh all of the benefits to be paid and the government makes an estimate of how long that’s going to be and has been doing this for decades and this next graph I want to talk about shows how um that estimate of how much more time there is before insolvency how much time there is and how that has changed over the last 20 years from 20 years ago 20 25 years ago we saw actually saw the uh line increasing the number of years increasing and then it flattened out and then beginning about uh 18 17 years ago it began to plummet and you can see that uh on this graph we we have the uh financial crisis and the great recession in a shaded area and you can see the big drop in the lifespan the expected lifespan of the fund that occurred during that time when unemployment went up so high fewer people were working more people were taking social security benefits and the projected lifespan of the of the fund drop uh significantly we see it uh continue to decline over time we see the impact of the COVID 19 recession uh having a small impact and accelerating the decline of the fund uh the lifespan of the fund until we see the terminal point here today the last shaded area is what I’ve termed the AI era. The AI era lies ahead of us and this is what we know or or what we think is almost certainly true is going to have an impact here. One is there’s going to be a lot of job losses by people who are younger and are funding the fund uh and that we’re so dependent on for the revenues coming into the fund. The other thing that is likely to happen and you may mention this earlier uh Mike and that is that there are a lot of people in their 50s and 60s who are being pushed out of the workforce as well. This is because so many companies are spending so much money on acquiring AI capabilities and technology that they are having to let go of people in order to afford that technology. And so 50 and 60 year olds are getting pushed out of the out of the workforce and they’re claiming Social Security earlier. So that’s another draw on the fund. And then the last thing is I think the likelihood and and really what the projections are right now by the the official projections are that the fund will become insolvent insolvent in six years in only six years. But that doesn’t take into account these additional draws on Social Security or and because nobody can predict what the uh what the impact will be on employment that’s not reflected in the six year uh projection either and finally the other thing that isn’t included is the likelihood of a recession. If we have a recession during this period and if it’s even half the size uh an impact of the financial crisis if it’s just half that size we’re looking at the possibility I think of the trust fund really uh getting to uh insolvency uh within four years and so four years is right around the corner and what is now what happens when we hit insolvency by law uh benefits social security benefits must be cut across the board by 22 percent now that’s an enormous amount 27 percent of of uh seniors depend on social security for all of their income 27 percent or almost half depend on social security for half of their income um in six years the social security benefits paid out will probably be about 2.7 trillion dollars a year imagine uh the impact on uh uh on consumer spending uh of losing 22 percent of that money going out into the public the impact on the economy would be huge so this is what’s required by law there’s a few things that can be done to sort of buy a little bit of time but not much and um and we can say for certain that this Congress is not going to address these issues before the 2028 elections. It’s just not going to happen. We’ve seen this coming for decades and we’ve not addressed it. So it’s not going to happen in the next year and a half. So the next president and the next Congress are going to have this sitting in their lap as soon as they walk in the door this enormous problem. And how many Democrats are going to be ready to cut benefits and how many Republicans are going to be willing to raise taxes to do this and that’s what’s going to have to happen. Both must happen. So this is going to be an enormous problem two years from now when Congress comes in and in January 2029 and a new president is uh is inaugurated they’re gonna be facing this with the possibility of Social Security trust fund being insolvent in two years. This is on the doorstop and uh and Americans really need to wake up seniors and anyone who believes that they haven’t that they have Social Security in the future and one of the tragic things that has happened about Social Security over the last decade or two is that people become convinced that Social Security cannot survive and therefore I’m not worried about Social Security when I retire because it’s not going to be around that is a self-fulfilling prophecy. There have been solutions to this that were relatively easy that could have been done 10 years ago. In fact there was an attempt back about 10 years ago to address this and it fell apart for political reasons. This is not rocket science it’s political will and now that we’ve gotten so close to insolvency it’s gonna be more difficult. It’s gonna be more painful all the way around to to to address it.

BRAD CHASTAIN 34:42

But it can be addressed uh and it and it it must be addressed and people who think that they don’t have a stake in the matter because Social Security is not going to be around for them well they’re making that true by believing that yeah and Philip I think I think Philip described the sort of the the two sides of the the pressure that Social Security feels well, right? Job loss, fewer people paying in, as well as accelerating the the liabilities or the benefits that are being paid out by Social Security on the other side. Another one I’ve been looking at that I don’t think is getting much coverage either is that is how AI can impact it in terms of shifting income because with a lot of the sort of new to the workforce, younger workers having their jobs more or less replaced, a lot of the revenue benefits and income benefits are likely to accrue to higher paid workers who are able to reap the rewards and profits from the AI in their businesses and things like that. And Social Security taxes are only paid on income up to about $185,000. So additional income generated from AI a lot of times isn’t even going to lead to more revenue into the Social Security system. But at the same time it affects everyone’s benefits when they get calculated not once somebody’s taking their benefit but when you go to retire they look at your highest 35 years of earnings and then they use a national average wage index to adjust all of the earlier years to kind of what people are earning at the time when somebody turns 60. And then there’s other calculations depending on when you actually take it after um 62 when you can start taking it. But the way that the national average wage index is calculated it is not capped at that $185,000. All wages are calculated. So it actually can, you know, when higher income workers are making more it raises the benefit that is owed by Social Security to literally everyone at the time when they uh when that calculation is made but it’s not taking in necessarily more revenue uh to meet those higher obligations so that’s another impact of social security in terms of that calculation that’s really just not taken into fact right now. And Philip you probably even know more about this I’m I’m curious too on on uh Medicare because my understanding too is that um by I think a year later 2033 the most recent report showed that part A, the hospital insurance which we don’t pay a premium for um is going to be dry as well and not be able to or not dry but not be able to pay as much of the hospital insurance that people very much rely on. Part B shouldn’t be affected. They have to come up with the money for part B, but is that correct?

PHILIP N. DIEHL 37:36

Yeah that the attention is all going to Social Security and that’s pretty much for obvious reasons that the the situation is more dire there. People focus more on the Social Security benefits than they do on Medicare. Medicare also has been uh Congress has been and the president has been over I’m not just talking about this Congress or this president but uh all of them for a decade or more have been able to uh really several decades have been able to sidestep the Medicare uh issue by transferring more of the weight onto doctors and providers uh onto hospitals and narrowing the benefits in ways that look more uh uh invisible seem more invisible to consumers but yes Medicare is absolutely right there uh standing at the doorway after Social Security to have to address that I can’t imagine Congress trying to tackle them both at the same time although that would make a lot of sense to do that but I think it’s just too much. I think Social Security is going to be the one that uh forces itself onto the floor of Congress to deal with it because people require it. I I tell you this is something like what we’re seeing with AI and data centers. Data centers a year ago I as I was reading about data centers uh I’m gonna claim to be Nostradamus here uh I was saying that uh within a year data centers are gonna be the biggest political issue that spans partisan divides that people on and both Republicans and Democrats left and the right are going to be outraged by uh what is happening around them and uh in their finances with data centers. And boy has that I wish I had put money on that bet a year ago because that is so true today. Members of Congress are going home and discovering a firestorm of outrage or at least worry about what the impact is on individuals in uh in in their neighborhood and in their pocketbooks from uh data centers. And that’s added on top of uh whatever concerns they have about their jobs or about the future of humanity that might be at stake with AI. Brad brought up a point that’s real interesting and these are I hadn’t really I hadn’t thought at all about what Brad was saying about the impact on on uh Social Security the dynamics that he was talking about about the structure of uh of how uh Social Security taxes are calculated uh but there’s another thing here that there’s another force at work too that I think is really important to look at and that is we know that AI that this is beyond a shadow of a doubt AI is going to transfer income and wealth from people who work to people who invest from workers to the people who provide the capital to build these AI systems. I mean you see this right now look at who are the trillionaires trillionaires in America’s economy today and those who were on the doorstep of becoming trillionaires they’re all involved in AI in one form or another and so what this means is that Social Security gains nothing from us having more trillionaires the capital is not taxed to support Social Security labor is and so that is going to be an enormous transfer of wealth toward those who have a lot of money to invest and I’m I’m not talking about us we we yes we invest absolutely we you we’re in the business of of uh of educating people about why gold should be part of their portfolios but the people who I’m talking to and the people who I’m talking about are people beyond means of any comprehensive of us. And we talk about the Gilded Age and the and the inequity of income and wealth between today and the gilded age back 150 years ago and no it’s so much more inequitable today. So we really have a hard time conceiving I mean a trillion dollars give me a break really uh so we we’re talking about these people the people who are going to be the huge beneficiaries of uh AI whenever that comes and in fact they’re gonna be the beneficiaries no matter what happens to ai they already are they’re taken care of they’re building their bunkers and and uh and that’s that’s not a myth they do and um and so they’re taken care of and but will they is their income being taxed to help support social security as our friends and neighbors and their children lose their jobs? No.

MIKE BARNES 43:10

All this talk about Social Security it’s one of Brad’s circles it brings us back to the start where we talked about someone 55 years old losing their job because of AI and when you’re 55 and you lose your job chances are you’re losing one of those 35 years or several of those 35 years of top uh revenue that’s gonna help your Social Security so while you were planning to get maybe $4,000 and now you’re gonna be down to $3200 and now if Social Security has trouble you’re gonna be down to $2,500. What do I need to do quickly from both of you? I’m gonna start planning I’m worried about my job because of AI. I’m worried about Social Security.

BRAD CHASTAIN 43:47

Brad what do I need to do Yeah I think it goes right back to what we’ve been talking about all along is make sure you’re diversifying. We see so many customers every single day that have just been Holding on to just their heavy, heavy stock allocations, having watched it go up so much over the last few years and feeling like it’s so hard to let it go and rebalance and get diversified. But given the concentration risk, especially around that AI piece that is so precarious from that revenue perspective, it’s just could be absolutely devastating to not have a diversified portfolio and kind of have too many of your eggs in that one basket there. So making sure that you’re doing what you can now to avoid that. Because when it unravels, uh it will be too late. Um the prices will already adjust, have started adjusting before people do, and then they get in that situation of, oh, prices are going down, I’m gonna wait till it comes back. And if you remember 2008, it when in those kind of worlds things can go a lot deeper, a lot faster than people realize. And uh and so you just you can’t be reactive. You have to be proactive and prepare ahead of time.

MIKE BARNES 45:04

Philip, I have a feeling you agree.

PHILIP N. DIEHL 45:07

Yeah, I’ve really been looking at this, and in fact, I I wrote a piece on this just in the last couple days. I’ve done a lot of research on this, and uh, and not just in the last few days, over the last several years. Um, we know, I think anybody who’s listening to this understands that gold is performs extraordinarily well when stocks are taking a beating. Just if you look back at the dot-com crash, at the uh financial crisis, at the uh at the uh COVID crisis, gold uh rose during those periods between like 24 and 47 percent over those times, while stocks declined by uh about the same amount, about to running from 24 to 45 percent uh in each of those periods. So I think everybody’s pretty convinced that gold is a great asset to have in hard times. What people do not understand really, and I was surprised some years ago when I looked at this, is how well gold performs over the long term and how over the last 20 years, and I choose 20 years not arbitrarily, but because uh because financial advisors, pension funds, insurance companies, hedge funds typically take a 20-year planning horizon, and that’s what they look at, and that’s what we should be looking at a longer-term horizon, because uh that’s we’re gonna be living, hopefully, in 20 years, and we need to have the funds that we or our family members, or if we’re building uh wealth for family, then um then we need to have that kind of a 20-year time horizon. And over the last 20 years, gold has matched the stock market’s performance almost exactly. If you’d invested $100,000 uh um 20 years ago, today you’d have $650 uh 000 uh in either one, stocks or or uh gold. And with stocks, that includes reinvesting all your dividends. Now, very few people do that. Um maybe maybe 70 or 80 percent of dividends get reinvested. But even if you had reinvested all of them, gold would have matched the performance, and that’s not a well-known fact. Now, that’s the rear view mirror. Let’s look at what’s likely to happen in the future. Well, there’s a general consensus that uh, and these are by the top market analysts uh and experts, that stock mark the stocks are unlikely to perform as well in the next decade as they have in the last decade. Not very many of those companies that are have put numbers on that. The average stock market performance uh has been 10%, uh 10% gain per year. And uh Charles Swab has has uh estimated that over the next decade the performance will only be about 5.9 percent. They’ve actually lowered it here in the last year. So only 5.9% compared to 10%. Vanguard uh and others have not put numbers on it, but they but they have made it very clear they believe markets will underperform what they have in the last 10 years. So what is gold expected to do? Well, uh we we have four estimates that have come out from major uh major uh major forecasting firms, and they range in their estimates for the next four years, and that’s as far as any of these estimates go, any of these forecasts go out to 2030. They estimate a performance of 11.4 percent per year to 25.5 percent per year, gold rising to as high as $10,000 an ounce by 2030, uh, by 2030. So that you know, that compares, so to compare that, that’s stocks below 10%, maybe as low as 5.9%, versus gold rising by 11.4 to 25.5 percent. I think in the ballpark, that’s right. I I I don’t know where in that range, but that’s an enormous range where gold uh outperforms stocks possibly by multiples. And so I think that given all the other advantages that gold has, I think gold properly has a a place in every portfolio. And uh people ought to be looking at uh at allocations as high as 20%.

MIKE BARNES 50:12

Great information from both of you today and some great history about picks and shovels. Philip Diehl and Brad Chastain, thanks so much for joining me today. Thanks, Mike. Thank you, Mike. As Brad said, AI does not tell the future, but AI does cause financial anxiety. Be careful with that. Plan, prepare, and diversify and see if that can help you in the future. That’s all the time we have for today’s episode. On behalf of all of us here in the U.S. Money Reserve Studios, thank you so much for tuning in. If you have any questions or you want to learn more about today’s episode, you can call the number in our episode description and speak with one of our friendly account executives. They’re going to be happy to answer any questions you may have about precious metals and the strategic role they can play in achieving a secure and comfortable financial future. I’m Mike Barnes. We will see you next time on America’s Gold Authority Podcast.