WEBVTT - Tariffs Ripple Through Markets 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.400 --> 0:00:30.440 Stephanie Roth joined us from Wolf and was really, really 0:00:30.480 --> 0:00:32.559 quite good about the moment. None of that mattered. The 0:00:32.600 --> 0:00:36.120 conversation is ancient history. She joins us for a reset 0:00:36.640 --> 0:00:39.040 after what we've witnessed in the last say, seventy two 0:00:39.159 --> 0:00:41.360 hours as well, I don't want you to do it? 0:00:41.360 --> 0:00:45.760 What if I want you to do how the fed 0:00:46.000 --> 0:00:52.760 Ex post waiting for data adapts and adjusts to the 0:00:52.800 --> 0:00:57.280 instabilities coming out of the Oval office in sixteen under Pennsylvania. 0:00:57.360 --> 0:00:58.920 Don't tell me. They just ignore it. 0:01:00.040 --> 0:01:02.000 But they don't just ignore it, but they probably don't 0:01:02.000 --> 0:01:04.040 do much because it doesn't make sense for them to 0:01:04.120 --> 0:01:08.160 be cutting if there's the potential for tariffs to be moving, 0:01:08.120 --> 0:01:09.560 inflation expectations higher. 0:01:09.640 --> 0:01:12.920 Are they more frozen than they were forty eight hours ago? 0:01:15.600 --> 0:01:16.640 No? Probably not. 0:01:18.319 --> 0:01:18.399 So. 0:01:18.600 --> 0:01:22.640 Okay, here's what we learned right, Tariffs on Canada and Mexico. 0:01:22.720 --> 0:01:24.760 That's what was really going to impact the US economy. 0:01:24.800 --> 0:01:26.880 That was going to be a real inflationary force. Could 0:01:26.880 --> 0:01:30.000 have boosted inflation by fifty plus basis points. It got 0:01:30.040 --> 0:01:32.800 delayed a month base cases. They probably just don't happen. 0:01:33.080 --> 0:01:34.880 I think that's what kind of that's what the message was. 0:01:35.120 --> 0:01:37.840 Trump probably wanted to do the China tariffs regardless, so 0:01:37.880 --> 0:01:40.000 the fact that that was a much smaller ten percent 0:01:40.600 --> 0:01:43.320 that was probably gonna happen either way, and he's going 0:01:43.360 --> 0:01:45.920 to continue to wratchet up tariffs on China. The Canada 0:01:45.959 --> 0:01:48.320 Mexico ones made a lot less sense, especially when we're 0:01:48.320 --> 0:01:49.000 talking in Canada. 0:01:49.520 --> 0:01:52.280 So have you adjusted your inflation out look at all 0:01:52.320 --> 0:01:54.840 for these tariffs or you're just kind of waiting to 0:01:54.840 --> 0:01:57.080 see what actually gets enacted if anything. 0:01:57.160 --> 0:02:00.240 So, based on our numbers, the China tariffs could boost 0:02:00.680 --> 0:02:03.200 infation by about ten basis points this year and hit 0:02:03.240 --> 0:02:06.480 GDP by about ten basis points as well. So at 0:02:06.520 --> 0:02:07.960 this point, I'm just going to wait and see what 0:02:08.000 --> 0:02:09.639 happens in the next two weeks. 0:02:11.120 --> 0:02:13.359 Could that be plus or minus ten baks points for sure? 0:02:13.520 --> 0:02:16.359 The rest of it, Yeah, but we're we're not assuming 0:02:16.400 --> 0:02:18.960 certainly any of the broader tariffs going to effect at this. 0:02:18.919 --> 0:02:23.840 Point, I'm absolutely fascinated by Atlanta GDP, which is a 0:02:23.880 --> 0:02:28.280 squishy number out on your four percent real GDP. Let's 0:02:28.280 --> 0:02:31.720 say that's an anomaly. But do we just continue to 0:02:31.800 --> 0:02:36.280 get the growthiness surprise that is made up the last 0:02:36.280 --> 0:02:37.120 eighteen months. 0:02:37.919 --> 0:02:39.919 At some point it will probably cool down, but we're 0:02:39.919 --> 0:02:40.920 still looking, we're. 0:02:40.800 --> 0:02:43.400 Rating, and we're still your own palls doing well. That's 0:02:43.400 --> 0:02:44.720 what your own powers. And there's things. 0:02:44.960 --> 0:02:46.560 There's a couple of things that are truly boosting the 0:02:46.639 --> 0:02:49.560 US economy and equity equity valuations are a big part 0:02:49.600 --> 0:02:52.760 of it. Networth in the US economy has been incredibly strong, 0:02:53.240 --> 0:02:56.360 over fifteen trillion dollars above the prior trend. And if 0:02:56.360 --> 0:02:58.200 you assume a couple cents on the dollar, that's a 0:02:58.240 --> 0:03:00.440 real boost to consumer spending something of the two and 0:03:00.480 --> 0:03:03.280 of one to two percent. And then, by the way, crypto, 0:03:03.320 --> 0:03:06.120 which you know doesn't go talking about quite as much, 0:03:06.240 --> 0:03:09.080 but there's also real wealth there and the marginal propensity 0:03:09.160 --> 0:03:12.919 to consume or the desire to consume for every dollar 0:03:12.919 --> 0:03:15.280 of wealth and in the crypto space is higher than. 0:03:15.120 --> 0:03:15.560 What it would be. 0:03:16.080 --> 0:03:16.840 This is important. 0:03:16.880 --> 0:03:19.960 You think the PhDs that the equities building, the echos 0:03:20.000 --> 0:03:24.840 building are looking at the marginal propensity to consume a 0:03:24.880 --> 0:03:25.519 bit dog. 0:03:26.000 --> 0:03:28.239 I think they're starting to because it seems like there's 0:03:28.240 --> 0:03:29.200 a legitimate impact. 0:03:29.200 --> 0:03:31.359 At this point, you can't really ignore. 0:03:31.040 --> 0:03:34.520 It, all right, Stephanie, So what is your GDP call 0:03:34.639 --> 0:03:37.960 for twenty twenty five and twenty twenty six. 0:03:38.520 --> 0:03:41.800 GDP for twenty twenty five is two point two inflation 0:03:41.880 --> 0:03:45.080 of two three twenty twenty six, we're looking at something 0:03:45.120 --> 0:03:47.800 closer to two percent. But I'm starting to get worried 0:03:47.800 --> 0:03:50.040 that terrifs will become a real issue for twenty twenty six, 0:03:50.080 --> 0:03:51.960 which would then put GDP below two percent. 0:03:52.320 --> 0:03:55.240 And is that driven by I mean, again, the consumer 0:03:55.520 --> 0:03:58.840 is seventy percent of this economy, so having any growth 0:03:59.000 --> 0:04:01.200 this year and next year flies that you have some 0:04:01.240 --> 0:04:02.320 confidence in the consumer. 0:04:02.520 --> 0:04:04.480 I do have confidence in the consumer. The consumer is 0:04:04.520 --> 0:04:06.640 doing just fine, especially if they don't get hit by 0:04:06.680 --> 0:04:09.720 these massive tariff at least this year. They have wealth 0:04:09.800 --> 0:04:13.920 and inequities in real estate. The labor market is just fine. 0:04:13.960 --> 0:04:15.800 We didn't talk about that, but jobs are probably going 0:04:15.840 --> 0:04:19.520 to be print another solid one this month, and that's 0:04:19.560 --> 0:04:22.120 what drives the consumer. They might be upset about the 0:04:22.360 --> 0:04:24.480 price of a lot of goods, especially when it comes 0:04:24.520 --> 0:04:25.240 to groceries. 0:04:25.560 --> 0:04:27.400 But we just have largely kept up with a lot 0:04:27.400 --> 0:04:28.000 of those goods. 0:04:28.680 --> 0:04:31.480 Jason Furman does a lot of work on an ecumenical 0:04:31.520 --> 0:04:36.839 inflation call, looking at different sum to annualized returns three 0:04:36.839 --> 0:04:38.160 month to annualize six months. 0:04:38.720 --> 0:04:40.320 All of them are sub three percent. 0:04:40.400 --> 0:04:43.520 As a general statement, will the shock that we see 0:04:43.560 --> 0:04:46.640 out the next three months, two three, four FED meetings 0:04:47.160 --> 0:04:52.479 be one or some of those annualized returns being under 0:04:52.560 --> 0:04:53.160 two percent? 0:04:54.440 --> 0:04:57.160 I wouldn't bet on the key one numbers being under 0:04:57.200 --> 0:04:59.400 two percent because we still have seasonal problems that if 0:04:59.400 --> 0:05:00.760 you have to be a dress the data. 0:05:01.440 --> 0:05:03.640 But Q two certainly could be Wow. 0:05:03.920 --> 0:05:07.560 I mean that's a that's a wild observation, and that inflation, 0:05:07.720 --> 0:05:10.479 you know, Oeer finally becomes well behaved in real estate 0:05:10.520 --> 0:05:14.040 becomes well behaved. Is that enough to generate a rate 0:05:14.120 --> 0:05:17.360 cut discussion? I just don't buy it. Given the political 0:05:17.400 --> 0:05:18.040 madness in. 0:05:18.120 --> 0:05:20.440 Washington we have, we have a rain cut in our 0:05:20.480 --> 0:05:23.280 forecast for May. But to be fair, that one's very. 0:05:23.279 --> 0:05:25.000 Much would you like to make some news here? 0:05:25.440 --> 0:05:30.480 Certainly not, but that one's really into that one's going 0:05:30.520 --> 0:05:33.440 to really rely on the employment data in the next 0:05:33.440 --> 0:05:35.560 couple of months being a little bit softer and inflation 0:05:35.680 --> 0:05:38.120 being subdued. We're going to have to get past the 0:05:38.160 --> 0:05:41.039 first January, February, March prints in terms of inflation, because 0:05:41.040 --> 0:05:43.400 that's where you see the real seasonality problems and that's 0:05:43.480 --> 0:05:44.440 going to continue again. 0:05:45.080 --> 0:05:46.760 Well on Friday, we are going to get the change 0:05:46.760 --> 0:05:50.600 in nonfarm and payrolls, and you know, one hundred and 0:05:50.640 --> 0:05:55.119 seventy thousand is the consensus. Quite a normal discussion about 0:05:55.200 --> 0:05:58.080 Friday exactly, and that big print last month of two 0:05:58.120 --> 0:06:01.000 hundred and fifty six thousand. What is your view of 0:06:01.040 --> 0:06:03.680 the labor market. I mean, we're going to get some 0:06:03.680 --> 0:06:07.159 some people are concerned that, Okay, nobody's firing anybody, but 0:06:07.240 --> 0:06:08.880 nobody's really hiring either. 0:06:08.960 --> 0:06:10.720 How do you think about the labor market, Yeah, the 0:06:10.760 --> 0:06:14.200 labor market's doing okay. There's been a lot of volatility 0:06:14.200 --> 0:06:16.520 when it comes to strikes and but weather, so it's 0:06:16.520 --> 0:06:18.320 hard to look through it. But our base case is 0:06:18.360 --> 0:06:20.560 the trend in payrolls is somewhere around one hundred and 0:06:20.560 --> 0:06:23.920 sixty thousand, which is really quite solid. This year is 0:06:23.640 --> 0:06:26.800 going to present some challenges though, because immigration trends are 0:06:26.839 --> 0:06:28.520 going to be going the other way than what they've 0:06:28.560 --> 0:06:30.920 been the past couple of years. So a lot of people, 0:06:31.000 --> 0:06:33.560 rough were estimate about three point six million people are 0:06:33.560 --> 0:06:35.960 going to lose their visas to work over the next 0:06:35.960 --> 0:06:39.120 two years, which will pose some challenges for the labor market. 0:06:39.120 --> 0:06:40.400 And that's a lot of that role that's going to 0:06:40.440 --> 0:06:41.600 happen in the bout half of this year. 0:06:41.720 --> 0:06:43.960 Like have you looked back over the last three four 0:06:44.080 --> 0:06:47.800 years about migration, legal and illegal, how that contributed to 0:06:47.839 --> 0:06:51.680 the labor force, because it feels like it's been a 0:06:51.800 --> 0:06:54.600 non you know, a fairly significant driver. 0:06:55.000 --> 0:06:57.120 It's probably one of the single biggest reasons why the 0:06:57.120 --> 0:07:00.480 Fed was able to actually rebalance the economy without causing 0:07:00.480 --> 0:07:02.359 our session is because we've got the supply side of 0:07:02.360 --> 0:07:05.039 the labor market actually helping to bring down inflation, so 0:07:05.080 --> 0:07:07.200 we didn't need the demand side of the economy to 0:07:07.200 --> 0:07:09.200 slow down quite as much. Now this is going the 0:07:09.240 --> 0:07:12.080 other way, which is into some degree okay, because now 0:07:12.200 --> 0:07:14.280 demand for labor has cooled compared to where we were 0:07:14.280 --> 0:07:17.920 two years ago. But this could present some challenges. We 0:07:18.000 --> 0:07:19.880 might start to see wage inflation pick up towards the 0:07:19.880 --> 0:07:23.240 back part of this year as labor supply again becomes constrained. 0:07:23.360 --> 0:07:26.520 Paul mentioned this in Ana Wong and Bloomberg Economics. 0:07:25.960 --> 0:07:29.080 Has provided global leadership on this, and this is the 0:07:29.160 --> 0:07:33.360 fourteen it's like Howard Johnson's It's like the pistachio revision 0:07:33.840 --> 0:07:37.800 or the butternut maple nut or revision. The revisions like 0:07:37.880 --> 0:07:40.920 this job's day. Are there one or two to study 0:07:41.400 --> 0:07:44.120 or is it just chaos through the spring and revisions 0:07:44.160 --> 0:07:45.080 of the job market. 0:07:45.400 --> 0:07:47.720 So this is going to be a chaotic report because 0:07:48.440 --> 0:07:50.960 this report, because we get annual revisions to both the 0:07:51.240 --> 0:07:55.520 headline jobs numbers and then also the data that associated 0:07:55.520 --> 0:07:56.360 with the unemployment rate. 0:07:57.040 --> 0:07:57.680 To what's going to. 0:07:57.680 --> 0:07:59.960 Happen is we're going to get a large upward revisi 0:08:00.080 --> 0:08:03.120 into the population which is tied to the measure for 0:08:03.160 --> 0:08:03.960 the unemployment rate. 0:08:04.640 --> 0:08:06.240 So it's going to be very confusing. 0:08:06.280 --> 0:08:10.120 You can't compare the January reading to December numbers because 0:08:10.240 --> 0:08:13.320 the revisions kind of don't don't work so well that way. 0:08:13.640 --> 0:08:15.000 But so there's gonna be a lot of noise the 0:08:15.040 --> 0:08:18.680 combination of massive revisions to the prior prior years. By 0:08:18.680 --> 0:08:20.200 the way, they're going to be adding three point six 0:08:20.240 --> 0:08:23.440 million people roughly to the labor force that weren't previously there. 0:08:24.040 --> 0:08:25.840 And then we also have the impact of the fires 0:08:25.880 --> 0:08:28.480 on going to be impacting the payroll's numbers, so that's 0:08:28.480 --> 0:08:30.280 where there could be a surprise that might be difficult 0:08:30.480 --> 0:08:31.920 to summer. 0:08:32.000 --> 0:08:35.920 Here, we're going to see a higher unemployment ratar we 0:08:36.040 --> 0:08:38.400 shock with revisions and go to three point nine. 0:08:38.360 --> 0:08:40.679 Percent, So for this part we're looking for four to 0:08:40.679 --> 0:08:43.400 one because they're going to revise both the numerator and 0:08:43.440 --> 0:08:45.520 the denominator, so in theory it should be all kind 0:08:45.559 --> 0:08:46.000 of help. 0:08:46.559 --> 0:08:51.160 This is the differential equations part of the show enumerator 0:08:51.200 --> 0:08:52.920 and the denominator a wise one. 0:08:53.120 --> 0:08:55.640 Yes, the moving the numertor and the denominator a base case. 0:08:55.679 --> 0:08:58.359 Which partial differential is most important. 0:09:00.120 --> 0:09:01.640 What we'll see is we'll get a little bit of 0:09:01.760 --> 0:09:05.640 upward pressure on the unemployment rate because there's going to 0:09:05.679 --> 0:09:08.040 be more people that have a slightly higher unemployment rate. 0:09:08.080 --> 0:09:10.320 So just the mixshift of people will be slightly higher 0:09:10.400 --> 0:09:12.800 terms of uneplom rate, but it shouldn't be massive. The 0:09:12.960 --> 0:09:14.439 thing that we're going to see over the next year, 0:09:14.440 --> 0:09:17.920 which is important, is that the unemployment rate will probably 0:09:18.000 --> 0:09:20.480 nudge down throughout the course of twenty twenty five, as 0:09:20.559 --> 0:09:23.880 labor comes constrained as a result of immigration, trends being 0:09:23.880 --> 0:09:25.359 pulled back pretty substantially. 0:09:25.400 --> 0:09:25.800 Interesting. 0:09:25.960 --> 0:09:28.800 See when you were in class and everybody who's pulling 0:09:28.840 --> 0:09:30.240 the quality See. 0:09:30.040 --> 0:09:33.240 Yeah, Stephanie was up in the third take a notes, 0:09:33.320 --> 0:09:33.920 nailing the. 0:09:33.960 --> 0:09:37.560 Curve shift it right out to it at AAA plus. 0:09:37.880 --> 0:09:38.880 We hated her. 0:09:39.000 --> 0:09:41.520 Yeah, gentlemen, c I was planning my next tea time 0:09:41.720 --> 0:09:44.920 across the street to do golf course. Stephanie, step back here. 0:09:45.000 --> 0:09:46.160 Talk to us about just a little bit more of 0:09:46.200 --> 0:09:50.120 a global view here. What's the impact on the global economy, 0:09:50.120 --> 0:09:52.920 on the US economy if China just does not get 0:09:52.960 --> 0:09:54.080 back on its feet. 0:09:54.400 --> 0:09:57.800 You know, we've been pretty insulated from China's economy for 0:09:57.800 --> 0:09:58.840 the past couple of years. 0:09:58.640 --> 0:10:00.160 And I think it's going to be more of the same. 0:10:00.840 --> 0:10:03.480 The US economy has been exceptional and Chinese economy has 0:10:03.480 --> 0:10:04.800 been quite sluggish. 0:10:04.320 --> 0:10:06.000 And I don't think that's going to change anytime soon. 0:10:06.720 --> 0:10:10.000 And I mean there's also the European economy has been 0:10:10.400 --> 0:10:13.160 weaker than they would certainly like. Certainly Germany, with its 0:10:13.200 --> 0:10:17.440 reliance on China and with its reliance on Russian for fuel, 0:10:17.520 --> 0:10:21.440 has been challenged as well, but that hasn't seemed to 0:10:21.520 --> 0:10:23.679 really impacted the US economy that much. 0:10:23.840 --> 0:10:27.000 No, it's been it's been pretty independent of the global cycle. 0:10:27.040 --> 0:10:28.600 And I think that's a lesson that we've learned as 0:10:28.640 --> 0:10:31.719 we've over time just shifted to become our sort of 0:10:31.760 --> 0:10:32.880 independent business cycle. 0:10:32.880 --> 0:10:36.040 And that will probably be the case for quite some time, and. 0:10:36.000 --> 0:10:39.280 The US economy will probably continue to remain fairly robust 0:10:39.280 --> 0:10:41.880 and the global economy might be kind of sluggish like 0:10:41.920 --> 0:10:43.280 we've seen for the past couple of years. 0:10:43.720 --> 0:10:44.880 Well, how's Paul doing. 0:10:45.000 --> 0:10:48.480 I mean, to me, they have to work ex posts, 0:10:48.520 --> 0:10:51.160 they have to be data dependent. You are brilliant unforded 0:10:51.280 --> 0:10:54.800 forward guidance at the fed to side show. But the 0:10:54.880 --> 0:10:59.240 answer is just they you know, they just they have 0:10:59.280 --> 0:11:01.040 to go day by day, months by month. 0:11:01.160 --> 0:11:01.360 Now. 0:11:01.760 --> 0:11:05.360 Yeah, And I mean it's tough for the for market 0:11:05.360 --> 0:11:07.840 participants because we don't really know exactly what the framework 0:11:07.880 --> 0:11:10.360 looks like. They haven't said a very clear framework for 0:11:10.400 --> 0:11:12.599 how they're thinking about it what to look for. The 0:11:12.880 --> 0:11:14.560 clearest thing that we've learned so far is it's going 0:11:14.600 --> 0:11:15.640 to a lot of it's going to come down to 0:11:15.679 --> 0:11:19.280 inflation expectations. Powell has pointed us to the September twenty 0:11:19.320 --> 0:11:22.000 eighteen teal book, and that basically said they had two 0:11:22.040 --> 0:11:24.840 different scenarios for how triffs impact the economy, and the 0:11:24.840 --> 0:11:27.760 differentiating factor between whether they have to cause a recession 0:11:27.840 --> 0:11:30.000 or not is if inflation expectations are angered. 0:11:30.040 --> 0:11:32.880 Step Thank you Stephanie roth Wolf research with us just 0:11:32.920 --> 0:11:35.680 really got a huge response when she's on some real 0:11:35.720 --> 0:11:38.720 clarity there about an ex post Central Bank. 0:11:45.280 --> 0:11:48.880 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:11:48.920 --> 0:11:52.120 weekday afternoons from seven to ten am Eastern Listen on 0:11:52.160 --> 0:11:55.840 Applecarplay and Android Atto with the Bloomberg Business Up, or 0:11:56.000 --> 0:11:57.480 watch us live on YouTube. 0:11:57.840 --> 0:12:02.920 Let us talk about President Trump's fascination with a gilded age, 0:12:03.200 --> 0:12:04.680 which is up to World War Two. 0:12:05.840 --> 0:12:08.559 There was an artist in Paris and then in. 0:12:08.520 --> 0:12:13.679 America immediately acclaimed as a young lad named Gus Sangoden, 0:12:15.200 --> 0:12:19.280 and in nineteen fourteen he made a gold coin, a 0:12:19.320 --> 0:12:23.840 twenty dollars double eagle gold coin, which is, you know, 0:12:23.840 --> 0:12:26.080 it's about the price of a weekend ticket right now, 0:12:26.520 --> 0:12:29.719 three thousand dollars for that. But the answer is there 0:12:29.760 --> 0:12:33.280 was a time where there were gold coins and they mattered, 0:12:33.400 --> 0:12:36.480 and it was a gilded age, and the president is 0:12:36.520 --> 0:12:40.920 fixated on that time. James Steele owns a high ground 0:12:41.000 --> 0:12:45.040 on this it joins us this morning. Gold at twenty 0:12:45.040 --> 0:12:48.600 eight hundred dollars an ounce is gold within a non 0:12:48.679 --> 0:12:53.000 flexible system, a far more dynamic system made more dynamic 0:12:53.040 --> 0:12:57.200 by Richard Nixon in nineteen seventy one. Are we in 0:12:57.240 --> 0:13:01.000 a gilded age of your gold as we were in 0:13:01.080 --> 0:13:04.240 nineteen fourteen with the twenty dollars double eagle? 0:13:05.200 --> 0:13:06.960 Well, what we are thank you for having me, Tom, 0:13:07.000 --> 0:13:09.640 And what we are is in a situation, is in 0:13:09.679 --> 0:13:13.680 a climate ever since Richard Nixon released us from Bretton 0:13:13.720 --> 0:13:17.280 Woods August seventy one. Yes, indeed, I remember it. I 0:13:17.480 --> 0:13:22.400 was at Catholic school at the time, and I remember 0:13:22.440 --> 0:13:26.000 when that was released and gold was allowed to begin 0:13:26.320 --> 0:13:29.920 to float freely and was freely completely freed by nineteen 0:13:29.960 --> 0:13:34.880 seventy three, and gold has continued. Gold fell throughout the nineties, 0:13:35.240 --> 0:13:37.360 but on balance has risen and we are in an 0:13:37.400 --> 0:13:40.160 age where government does not dictate what the gold price. 0:13:40.200 --> 0:13:41.200 That's where I want to go. Okay. 0:13:41.400 --> 0:13:47.280 We had a static, rules driven, government driven environment up 0:13:47.360 --> 0:13:50.280 until Bretonwoods nineteen forty four, and the Nixon destroyed it. 0:13:50.679 --> 0:13:54.360 And yet now the paper reports are we've got bars 0:13:54.360 --> 0:13:56.320 of gold coming from London. 0:13:56.040 --> 0:13:56.920 Over to New York. 0:13:57.320 --> 0:14:02.720 You're expert on this government's trying to control gold now, 0:14:03.080 --> 0:14:05.360 trying to get us back to that time and place. 0:14:05.559 --> 0:14:06.719 I don't think they can do it. 0:14:07.040 --> 0:14:10.000 No, no, and I don't think in that sense that 0:14:10.040 --> 0:14:12.560 they that they want to. One of the things about 0:14:12.920 --> 0:14:15.560 when we were on a gold standard save from the 0:14:15.640 --> 0:14:18.160 end of the Napoleonic War up until the First War, 0:14:18.800 --> 0:14:23.480 and it was enormously successful. Sterling was the world's reserve 0:14:23.600 --> 0:14:26.480 currency backed by gold. But the reason that it worked 0:14:26.600 --> 0:14:29.760 was because that was at a time of incredible expansion 0:14:29.800 --> 0:14:34.040 in the supply of gold. That's when the North America, Australia, 0:14:34.480 --> 0:14:38.360 Southern Africa really opened up, so and effectively the increase 0:14:38.400 --> 0:14:42.560 in gold was like raising the money supply. And we're 0:14:42.560 --> 0:14:46.280 not in that situation now. We couldn't have the world's 0:14:46.280 --> 0:14:48.120 currencies tied back to the dollar. 0:14:48.160 --> 0:14:48.520 Again. 0:14:48.880 --> 0:14:51.440 The gold market isn't big enough or fluid enough in 0:14:51.480 --> 0:14:55.560 the modern times. But it worked, and it sufficed for 0:14:56.360 --> 0:14:59.000 a long period and made trade very very stable. 0:14:59.200 --> 0:14:59.760 Did it but. 0:15:00.280 --> 0:15:04.600 Kept the rich rich and subdued the middle class. And 0:15:04.640 --> 0:15:08.160 then we said we needed a credit expansion, and that 0:15:08.320 --> 0:15:11.640 was an overlay out of the New Deal, the depression 0:15:11.680 --> 0:15:15.200 and all that into World War Two. So what's the 0:15:15.240 --> 0:15:16.880 next step here for gold? Paul? 0:15:17.440 --> 0:15:20.800 You bought it at what one thousand an ounce? Eight hundred? 0:15:20.840 --> 0:15:22.600 I mean, what's the next step? James Deal? 0:15:23.040 --> 0:15:25.880 Well, indeed, I mean, and I do like the historical 0:15:25.960 --> 0:15:29.920 reference because William Jennings Bryan said, not a crossify us 0:15:29.960 --> 0:15:33.120 on a cross of silver, because we were on a 0:15:33.120 --> 0:15:34.160 by metallic Is. 0:15:34.120 --> 0:15:36.480 Donald Trump saying it right now? I think there's some 0:15:36.560 --> 0:15:37.320 element of that. 0:15:37.560 --> 0:15:41.360 Well, I think that what we're seeing is a geopolitical uncertainty, 0:15:42.200 --> 0:15:46.960 uncertainty over trade and taris and what gold is, it's 0:15:48.360 --> 0:15:52.480 it's a release valve. It allows for that uncertainty to 0:15:53.000 --> 0:15:53.880 be made visible. 0:15:54.880 --> 0:15:59.040 So China, where are they in terms of demand here 0:15:59.080 --> 0:15:59.480 for gold? 0:15:59.480 --> 0:16:00.880 Because I know the. 0:16:00.880 --> 0:16:03.680 Last several times we spoke, you were really explained to 0:16:03.720 --> 0:16:08.040 us how China, the government, China the population are incremental 0:16:08.080 --> 0:16:10.040 buyers of gold, and that's been one of the reasons 0:16:10.040 --> 0:16:11.960 that gold's been moving higher. Is that still the case? 0:16:12.800 --> 0:16:13.000 Yes? 0:16:13.120 --> 0:16:18.040 On balance, China is in the unusual position of being 0:16:18.080 --> 0:16:22.080 both the world's largest producer of gold and the world's 0:16:22.160 --> 0:16:26.440 largest consumer and often the world's largest importer, rivaling with 0:16:27.120 --> 0:16:29.960 India depending upon the year. So if you can think 0:16:29.960 --> 0:16:33.360 about taking corn to Iowa, I mean, that's what their 0:16:33.720 --> 0:16:39.400 importing gold is like. But high prices have curbed retail 0:16:39.440 --> 0:16:45.120 demand fifty percent of all physical demand in the world. 0:16:45.240 --> 0:16:47.840 I'm not talking about what we trade on Wall Street 0:16:47.920 --> 0:16:54.080 or the city, but underlying demand is between China and India. Yes, 0:16:54.240 --> 0:16:55.400 and these high prices. 0:16:55.840 --> 0:16:57.880 It's our great honor to bring you. James Steele of 0:16:58.040 --> 0:17:00.320 HSBC and I want to go to care Nada. 0:17:00.800 --> 0:17:03.760 Kin Ross was an amalgamation of three or four companies, 0:17:03.800 --> 0:17:05.600 you know, typical Canadian. 0:17:05.400 --> 0:17:07.960 Mining out of Toronto and that. But you've been to 0:17:08.000 --> 0:17:11.320 their mine in Alberta. Is it like a Disney movie? 0:17:11.520 --> 0:17:12.879 Did you go with White Fang? 0:17:13.240 --> 0:17:17.119 Well, without without speaking about to say anyone mine in particular, 0:17:17.200 --> 0:17:20.600 I have been to mines in Canada, the US, and Australia. 0:17:20.680 --> 0:17:23.920 It's always a it's always interesting. You have to dig 0:17:23.960 --> 0:17:28.240 deep for gold. One of the interesting things about mining 0:17:28.520 --> 0:17:32.000 is that the or grade all over the world is dropping. 0:17:33.520 --> 0:17:38.119 We've mined a great deal of gold, about fifty percent 0:17:38.160 --> 0:17:40.879 of all of my gold that's ever been mined was 0:17:40.920 --> 0:17:44.840 mine between nineteen fourteen and up into the fifties, and 0:17:45.000 --> 0:17:47.680 so we have to go to further and further out 0:17:47.800 --> 0:17:51.920 like Papua New Guinea, into the jungle in Indonesia, places 0:17:51.960 --> 0:17:52.280 like that. 0:17:52.400 --> 0:17:56.240 The gold in this Bulgari snake bracelet that Lisa is 0:17:56.240 --> 0:17:59.240 looking at for Valentine's Day is that. 0:17:59.320 --> 0:18:03.040 Newly mine gold. Where does that gold come from? It's 0:18:03.240 --> 0:18:03.800 likely to be. 0:18:04.080 --> 0:18:06.880 But the marvelous thing about gold is that it's never 0:18:06.920 --> 0:18:12.600 consumed and it doesn't tarnish. So you could have a 0:18:12.600 --> 0:18:15.840 piece of jewelry around your neck that goes back to 0:18:16.320 --> 0:18:21.000 ancient Rome or ancient Egypt. It's unlikely, but you might scam. 0:18:21.560 --> 0:18:23.680 You just described you. 0:18:24.240 --> 0:18:27.840 You can't guarantee it, especially after it's been refined into 0:18:27.840 --> 0:18:30.280 a bar and the bar has been re refined. 0:18:31.760 --> 0:18:35.960 Fort Ontario twenty six percent. I did, Quebec, yeah, twenty 0:18:35.960 --> 0:18:39.680 six percent, Quebec nine percent, British Columbia and the rest 0:18:39.720 --> 0:18:42.080 is a Disney movie up in the mountains with they 0:18:42.080 --> 0:18:43.119 wear ll bean boots. 0:18:43.200 --> 0:18:44.760 We've been talking a lot about gold because it is 0:18:44.840 --> 0:18:47.480 up almost eight percent this year, but silver is up 0:18:47.520 --> 0:18:48.160 ten percent. 0:18:48.600 --> 0:18:49.159 What's going on? 0:18:49.200 --> 0:18:52.560 With silver, well, silver very often. I wouldn't go so 0:18:52.600 --> 0:18:55.280 our as to say it's the handmaiden of gold, but 0:18:55.359 --> 0:19:00.760 it does have a correlation what typically happened. But the 0:19:00.760 --> 0:19:05.240 big difference between silver and gold is that over fifty 0:19:05.280 --> 0:19:09.160 percent of silver is used industrially and only six percent 0:19:09.200 --> 0:19:13.880 of gold is used industrially. Less than a fifth is 0:19:14.000 --> 0:19:16.320 in jewelry and less than a fifth is in coins 0:19:16.359 --> 0:19:19.640 and bars. So industry is really what powers the demand, 0:19:20.119 --> 0:19:23.880 and that demand is inelastic. Nobody's stop making a cell 0:19:23.880 --> 0:19:27.959 phone because the silver price went out. But as far 0:19:27.960 --> 0:19:30.600 as the trading goes, a lot of people will look 0:19:30.600 --> 0:19:34.679 at a gold silver ratio, and for much of my 0:19:34.840 --> 0:19:38.080 career it was fifty to seventy. Now it's sort of 0:19:38.119 --> 0:19:41.639 seventy to ninety. When it gets above ninety, you tend 0:19:41.680 --> 0:19:46.400