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Speaker 1: Bloomberg Business News twenty four hours a day. If Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

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Speaker 1: slash c m E Group. And we are watching some

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Speaker 1: headlines here crossing the Bloomberg star Wards saying that aim

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Speaker 1: Bang Group made a redvice proposal for eighty two dollars

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Speaker 1: seventy five is since share again. That is just crossing

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Speaker 1: the Bloomberg and we will continue to keep monitor those

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Speaker 1: headlines as they cross and keep you updated. Meanwhile, US

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Speaker 1: do Condex Futures trimmed an advanced following equities first decline

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Speaker 1: in six as investors assess whether the world's largest economy

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Speaker 1: is strengthening enough to handle higher interest rates SNPE. Many

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Speaker 1: futures are now at four points now even if you

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Speaker 1: here is up thirty nas docum Many futures up about

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Speaker 1: sixteen the ten your treasury is a little change. He

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Speaker 1: at one point eight nine per cent yield on a

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Speaker 1: two year point eight six percent and nine ex screude

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Speaker 1: oil up one cent. Now it's a thirty nine dollars

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Speaker 1: forty six cents a barrel co mix gold is down

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Speaker 1: a tenth of upper center a dollar thirty to twelve twenty.

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Speaker 1: Announced the euro at dollar eleven ninety one the end

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Speaker 1: one thirteen point three seven. And that's a Bloomberg business flash.

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Speaker 1: Tom and Barry Karen thanks so much greatly. I appreciate it.

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Speaker 1: Barry rid Holts at myself here Michael McKee off. Today

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Speaker 1: we need to get an update on gold. James Steele

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Speaker 1: has been hugely valuables. He's hugely popular based on the mail,

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Speaker 1: and we get could people, for whatever reasons, still have

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Speaker 1: a real attention to gold. James, have you reaffirmed your

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Speaker 1: long view that you need own gold here at twelve

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Speaker 1: to the ounce. Well, we we are bullish, I mean

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Speaker 1: we are looking for the top of the market to

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Speaker 1: be around, but our our average for the year is

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Speaker 1: more like more like twelve oh five. So we do

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Speaker 1: see a modest upside from here, but not not greatly

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Speaker 1: excessive and I think the pullback where we saw last

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Speaker 1: year probably you know, you know, reaffirms that you need

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Speaker 1: just a tinge of caution in the market. The tinge

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Speaker 1: of caution is an asset that doesn't have an income.

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Speaker 1: Maybe you get it through a mining stock. I doubt

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Speaker 1: that though recently. But the basic idea of the traditional

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Speaker 1: reasons to own gold have they changed? No? No, And

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Speaker 1: I think that as a certainly as a portfolio diversifier

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Speaker 1: and a safe haven, it's uh, it's still a highly

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Speaker 1: highly regarded asset and and performs very well when other things,

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Speaker 1: when other things do not. And and I think what

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Speaker 1: we saw very recently knocking the market down from that

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Speaker 1: twelve sixty odd high, you know, down closer over the

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Speaker 1: weekend actually to to to near twelve at one point,

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Speaker 1: was a combination of the Fed uh comments from FED

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Speaker 1: officials last week having a more hawkish tinge, the introduction

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Speaker 1: of the possibility of rate rise in in April. And

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Speaker 1: I think that and and the dollar rally and and

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Speaker 1: the combination there um really uh gave I think anyone

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Speaker 1: that wanted to take profits or or was a little

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Speaker 1: bit nervous about, you know, the really robust rally we've

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Speaker 1: seen from the beginning of the new year, uh, gave

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Speaker 1: it every reason to to pull back. Hey, James Barry

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Speaker 1: Ridholts here. So we've noticed that when the dollar has

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Speaker 1: been really strong, as it has been for the better

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Speaker 1: part of five years, gold priceton dollars has a hard

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Speaker 1: time making headway. Um the past I don't know, let's

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Speaker 1: call it eight months, the dollar has been fairly range

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Speaker 1: bound and gold has been doing pretty well. How much

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Speaker 1: of the gold story is really a dollar story? Well,

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Speaker 1: there's always a decent proportion of it. I mean it.

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Speaker 1: It is probably the most stable relationship in the gold

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Speaker 1: market over say, since in the Breton Woods, from the

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Speaker 1: from from the early seventies. Is this inverse dollar gold relationship,

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Speaker 1: and and the certainly the weakness in the dollar earlier

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Speaker 1: this year. But you're very correct to point out that

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Speaker 1: last year, in the year before um, although rangebound, the

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Speaker 1: dollar was reasonably strong, particularly against the euro, and and

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Speaker 1: gold tends to be most positively correlated with whatever the

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Speaker 1: world's second reserve currency is, and currently that's of course

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Speaker 1: the euro. So UM, the little pullback we've seen, or

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Speaker 1: the gains rather in the dollar in the last week

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Speaker 1: or so was enough to push us back. Now we're

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Speaker 1: looking for dollar euro to be more like one twenty

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Speaker 1: by the end of the year. That the HSBC view

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Speaker 1: and and predicated on that the relationship with gold would

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Speaker 1: take us closure. So so you're putting the dollar weekends.

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Speaker 1: That's good for the euro and therefore that's good for gold.

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Speaker 1: Am I am I having correct that that that's correct?

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Speaker 1: Now the the the the currency relationship isn't the only

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Speaker 1: one in the gold market. But if I had to

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Speaker 1: say what is the single most important one over time,

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Speaker 1: that that is the one I would point to. So

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Speaker 1: let's let me ask you about another correlation that I'm

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Speaker 1: reading a lot about, which is the historical relationship between

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Speaker 1: gold and silver, and it seems to have gotten to

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Speaker 1: a place that either silver is dirt cheap or gold

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Speaker 1: is expensive. Do you think that relationship is going to

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Speaker 1: continue or is that now history? I know there is

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Speaker 1: a dollar excuse me, that gold silver relationship, we've uh

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Speaker 1: it changes over time that that me or most of

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Speaker 1: us look at in in terms of a ratio, Historically

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Speaker 1: it's usually around seventy to one. It has been much

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Speaker 1: much lower than that. It is it reached the hive

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Speaker 1: around a hundred to one way way back in the

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Speaker 1: UH early nineties or so, when gold was at or

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Speaker 1: late eighties, when gold was at three fifty dollars announced

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Speaker 1: and silver was only three fifty announced three dollars fifty

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Speaker 1: cents announced. It's come back around eighty. Now. I think

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Speaker 1: the silver market is relatively uh undervalued compared to gold.

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Speaker 1: I think we're probably, you know, with the gold market

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Speaker 1: over twelve hundred, we may see it takes back to

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Speaker 1: silver coins and silver bars by more price sensitive buyers.

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Speaker 1: So I would anticipate that the silver can do a

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Speaker 1: little better on the gold and that that radio will

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Speaker 1: fall back more like into the seventies. Let's come back

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Speaker 1: with James Steele. Will continue to talk about mining and

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Speaker 1: consumption and supply demand dynamics of gold. Every once in

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Speaker 1: a while a name comes across and I go who,

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Speaker 1: And then at a research and I'm embarrassed I didn't

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Speaker 1: know who they were. And even more importantly, boy, is

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Speaker 1: it an interesting transaction for talent and horsepower that in

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Speaker 1: the business. You know Ian Cook of Colgate Palmolov, You

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Speaker 1: may know Dennis Hickey or CFO. They have just lost

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Speaker 1: Fabian Garcia, one of their internationalists with Hills Food among others,

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Speaker 1: to Ron Perlman's Revlon from thirty eight thousand employees down

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Speaker 1: to six thousand. Fabian Garcia UH just announced he will

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Speaker 1: be on board running Ron Perlman's Revlon is CEO. Fabian T.

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Speaker 1: Garcia moves from Colgate to Revlon. This is Bloomberg's Surveillance

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Speaker 1: cutting down to the opening Bilbi by the jeep Grand

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Speaker 1: Cherokee that wants to worry the sub. Ever, the Grand

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Speaker 1: Cherokee continues to raise the bar with its luxurious interior,

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Speaker 1: legendary four by four capability drive product your local jeep

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Speaker 1: dealer today broadcasting live to New York Cloomberg eleventh to Washington,

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Speaker 1: d C, Bloomberge to Boston, Bloomberg twelve hunders to San Francisco,

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Speaker 1: Bloomberg nine sixteen to the Country Series X Channel one

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Speaker 1: nineteen and around the globe the Bloomberg Radio Plus happened

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Speaker 1: Bloomberg dot Com. This is Bloomberg Surveillance and Governing. I'm

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Speaker 1: Karen lost Down along with Tom Keene and Barry rid Holts,

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Speaker 1: and the Opening Dell is brought to you by s C.

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Speaker 1: I have evolving investor in regulatory demands affected your investment

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Speaker 1: Platform and se i C dot com slash. Imagine stocks

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Speaker 1: higher at the open. The SNP five hundred up two

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Speaker 1: tenths per cent or three points to twenty thirty nine

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Speaker 1: down Jones Industrial Average up a tenth of upper cent

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Speaker 1: or twenty eight points to seventeen thousand, five hundred forty four.

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Speaker 1: Nastacs up two tenths per cent or eleven points to

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Speaker 1: eighty five. Can your treasury up one thirty second to

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Speaker 1: yield one point eight nine percent? Yell on a two

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Speaker 1: year point eight six percent now I'm excrut Oil is

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Speaker 1: down a tenth of upper center, three cents to two

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Speaker 1: of Barrel Comics Gold is little change, down sixty cents

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Speaker 1: announced the zero at all or even the end one

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Speaker 1: thirteen point to nine. Tom and Barry, thank you so much.

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Speaker 1: Care Now we have to get our mail going. We

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Speaker 1: do that better with Gold people than with anyone else.

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Speaker 1: Idea with James Steele, with us with h B C.

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Speaker 1: James Steele, do you own Kruger rans I do not

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Speaker 1: um uh it is frowned upon for uh anyone connected

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Speaker 1: with the markets to to to own themselves, particularly in

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Speaker 1: a research. Okay, fine, fine, I love that idea. But

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Speaker 1: am I right that they still exist? And people can

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Speaker 1: buy gold through buying little coins that were huge popular

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Speaker 1: days and and you can buy et f s or

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Speaker 1: coins or small bars. Why why wouldn't someone just want

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Speaker 1: the gold on him? Is it just theft issue? I mean,

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Speaker 1: is that the number one issue? Well? I think in

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Speaker 1: the case of the ets, there's there's advantages with storage

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Speaker 1: and insurance, um, exactly. And uh, and of course there's

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Speaker 1: a price difference. Um, I'm not okay with with with

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Speaker 1: the spreads between the two. I understand that I'm not

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Speaker 1: trying to put you on the spot. And no, no, no,

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Speaker 1: of course, Barry, did you ever have any friends or

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Speaker 1: family that that walked around with a tilt to the

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Speaker 1: right because their pockets were loaded with Kruger as I

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Speaker 1: will tell you one of the things that has been

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Speaker 1: going on over the past couple of years since the

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Speaker 1: financial crisis. Uh, in in the high net Worth neighborhoods,

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Speaker 1: there are now hidden safe embedded in the concrete cement

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Speaker 1: in the floor of the basement under an area rub

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Speaker 1: to hide things like golden diamonds and other stuff because

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Speaker 1: of exactly what you refer to. The negative cost of carry,

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Speaker 1: storage and security and insurance is not it's a non

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Speaker 1: zero number, James. I have a stafe like that in

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Speaker 1: my house. That's a very good that's a very good point,

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Speaker 1: Barry Um. The negative interest rate issue has UH has

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Speaker 1: made it much cheaper to own the physical absolutely right.

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Speaker 1: I mean, I think it's fascinating folks. Just as a point,

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Speaker 1: I have a safe in my house to embedded in

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Speaker 1: concrete has got my Red Sox World Series tickets as well, James.

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Speaker 1: I mean, the emotion of gold is still there. You've

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Speaker 1: been right about, you know, trying to find a bottom

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Speaker 1: and golden and where where it goes. To give us

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Speaker 1: an update on the demand dynamics for gold, It's not

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Speaker 1: just about Kruger rands in embedded safes, is it. UH. No,

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Speaker 1: that is corrected. It is a bit of a wider universe.

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Speaker 1: And I think that's one of the reasons behind UM.

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Speaker 1: A secondary but compelling factor behind the pullback is that

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Speaker 1: what we have seen with the rally this year when

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Speaker 1: we went from below eleven hundreds up to twelve sixty

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Speaker 1: odd is UH is a big pullback and emerging mark

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Speaker 1: demand and also in coin demand, UH and bar demand

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Speaker 1: by retail investors. Uh, in the Western world, they dropped

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Speaker 1: quite quite noticeably, and it's it's a form of sticker

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Speaker 1: shock and UH, you know, Barry, you mentioned the dollar earlier.

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Speaker 1: This was compounded by the fact that the rupee, say

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Speaker 1: for example, in India, has done poorly against the dollar,

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Speaker 1: and so in local currency terms this is even higher.

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Speaker 1: And and we have a a steep discount right now

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Speaker 1: in India two world gold prices, which effectively means that

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Speaker 1: the import demand for gold isn't there. And that can

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Speaker 1: continue for a few days or a few weeks, but

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Speaker 1: over time that reduction in physical demand is going to

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Speaker 1: lead to a pullback in in prices, and I think

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Speaker 1: that's part of the retracement that we've been seeing recently.

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Speaker 1: So one of the things that keeps coming up whenever

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Speaker 1: we discuss gold is the cost of mine it. And

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Speaker 1: I've heard all sorts of crazy prices from two hundred

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Speaker 1: dollars and ounce to twelve h What is it actually

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Speaker 1: cost the minors to extract this malleable, shiny yellow metal

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Speaker 1: from the ground. Well, there there is a great range

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Speaker 1: and the average UH costs can be you know, five

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Speaker 1: to nine hundred, but the the the the only sustaining

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Speaker 1: costs or the marginal costs can be considerably above that,

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Speaker 1: up to you in some small cases, UM, and once

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Speaker 1: you get to the eleven point, it really does become

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Speaker 1: more difficult for the more expensive producers to UH to produce.

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Speaker 1: Now that's not to say that they'll shut production in overnight.

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Speaker 1: What it does more is it constrains future output exploration

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Speaker 1: and production spending, things, things things like that. But there

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Speaker 1: is this difference between the average and the marginal costs,

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Speaker 1: which which which, which I think can be a bit confusing.

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Speaker 1: James Steele, thank you for the briefing again, congratulations and

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Speaker 1: a fundamental call on gold. He's an HSBC with gold

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Speaker 1: twelve twenty two year heard him talk about a migration

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Speaker 1: a bit higher and I want to overplay that here

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Speaker 1: with much of the move being had. James Steele again

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Speaker 1: with HSBC. Bear are you've written about this UH for years.

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Speaker 1: We all know gold bugs. UH. Every once in a

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Speaker 1: while they are right, right, right right? What is the

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Speaker 1: new gold theory for you? What's changed? Well, A couple

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Speaker 1: of things have changed. Recall QEU was going to destroy

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Speaker 1: the dollar, was going to cause hyper inflation. All these

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Speaker 1: things were gonna be great for gold. That hasn't happened. Now.

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Speaker 1: The new theory that seems to be circulating is you

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Speaker 1: have to have gold as a diversifier just in case

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Speaker 1: there's another recession coming along. And so it's a more circumspect,

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Speaker 1: more let me be blunt, more thoughtful approach. When the

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Speaker 1: last narrative failed, something had to feel its its shoes,

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Speaker 1: and this one seems to be a lot more rational

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Speaker 1: than the previous one. I think what a lot of

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Speaker 1: people are missing from the Big boom was the impact

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Speaker 1: of the g l D e t F. It was monstrous.

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Speaker 1: It briefly became the biggest ETF, bigger than even the spiders.

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Speaker 1: The dynamic you have a believable gold or their leveraged

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Speaker 1: or their triple or four poles, well forget the leverage ones,

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Speaker 1: just the straight up g l D. If you want

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Speaker 1: an intelligent way to have some gold explosion of portfolio

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Speaker 1: two or three percent, it's better than having to deal

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Speaker 1: with managed futures. But there's a lot of academic literature

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Speaker 1: that says, uh commodities are not a great diversifier. They're

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Speaker 1: not a great hedge on. Uh, for the reason you

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Speaker 1: alluded to earlier. There is no coupon, there is no

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Speaker 1: discounted cash flow, there is no dividend yield. It's really

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Speaker 1: hoping that a greater fool comes along and pay more

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Speaker 1: than you did. That's the other side of that argument.

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Speaker 1: I point out Mr Steele's important comments there on using

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Speaker 1: this phrase as an amateur the lifting costs of gold variable,

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Speaker 1: but then with a lot of add ons as well. Again,

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Speaker 1: we don't have an opinion on this. We thank Mr

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Speaker 1: Steele first comments others as well, including the World Gold Council,

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Speaker 1: which dark in the door here every once in a

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Speaker 1: while on a Monday. Let's set up the week for you. Uh.

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Speaker 1: Let me get to that with a lot of economic

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Speaker 1: data in a rush jobs report April one, Barry, when

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Speaker 1: was the last time we had, oh one? I don't

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Speaker 1: have any answer. I do not recall us having the

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Speaker 1: first of the month. It's really rare because it takes

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Speaker 1: the ls a few days when the month ends to

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Speaker 1: assemble all their data. I guess the holiday week gave

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Speaker 1: them a little benefit. Yeah tomorrow, Janet Yelling in an

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Speaker 1: incredibly important speech, the last time she spoke. I believe

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Speaker 1: it was slack slack slack. We'll get a different tone.

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Speaker 1: Uh this time Cherry yelling at the Economic Club of

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Speaker 1: New York on please to say I'll be there, uh

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Speaker 1: not for the lunch for the converse station. H Janet

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Speaker 1: Yellen with questions important questions from Alan Blinder, who joined

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Speaker 1: us on our last FED telecast in Glenn Hubbard of Columbia.

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Speaker 1: So from Princeton and Columbia, two very bright people who

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Speaker 1: agree on so much. And now to the news and

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Speaker 1: the news and surveillance a bunch of by Westchester Subaru.

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Speaker 1: Visit Westchester Subaru dot com. Here's Michael Barr, Tom Berry,

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Speaker 1: thank you very much. Ryot's erupted in Pakistan for a

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Speaker 1: second day today when extremists surged towards the parliament and

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Speaker 1: other key buildings in Lahore. The demonstrators set cars on fire,

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Speaker 1: demanding that the authorities imposed Islamic law. At the same time,

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Speaker 1: the death toll from a huge suicide bombing targeting Christians

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Speaker 1: gathered on Easter in the eastern Pakistani city rose to

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Speaker 1: at least seventy two. Secretary of State John Kerry says

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Speaker 1: the US race to the white House, and the issue

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Speaker 1: of Muslim immigrants is being seening overseas as a circus

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Speaker 1: of campaigning. Carry spoke on CBS has faced the nation

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Speaker 1: to some degree. I must say to you some of

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Speaker 1: the questions, the way they posted me, it's clear to

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Speaker 1: me that what's happening is an embarrassment to our country.

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Speaker 1: Former Cuban leader Fidel Castro has something to say about

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Speaker 1: President Obama's The Story trip to Havana. In his first

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Speaker 1: response to the president's three day visit last week, Castro says,

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Speaker 1: we don't need the Empire to give us any presents.

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Speaker 1: Castro's letter in State Media is a bristling recount of

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Speaker 1: the history of US aggression against Cuba. Global News twenty

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Speaker 1: four hours a day, powered by our journalists and more

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Speaker 1: than a hundred fifty news bureaus from around the world.

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Speaker 1: Michael Barck, Top and Macha, thanks so much. Coming up,

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Speaker 1: we're gonna talk with one of the truly most knowledgeable

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Speaker 1: people in America about Cuba. We waited to do this

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Speaker 1: until the President came back from Cuba so we would

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Speaker 1: have the full perspective of his days down there. We

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Speaker 1: will do that next. This is Bloomberg's surveillance Surveillance brought

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