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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P and L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. We

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Speaker 1: want to consult now with Patrick Chauvannack. He is a

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Speaker 1: managing director and chief strategist for Silvercrest Asset Management and

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Speaker 1: he can be followed on Twitter at pr Schauvannic. Thank

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Speaker 1: you very much for being here. Patrick, Happy New Year

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Speaker 1: to you. Maybe you could just draw the connection for

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Speaker 1: our listeners between what happens with US interest rates and

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Speaker 1: global debt situation, specifically, what is happening in China right now. Well,

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Speaker 1: you know, I wouldn't draw a direct connection with what's

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Speaker 1: going on in China. I do think that whenever you

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Speaker 1: have interest rates rise in the United States, with the

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Speaker 1: prospect of interest rates rising in the United States, you've

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Speaker 1: seen a pullback of dollar liquidity to the United States,

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Speaker 1: and that's undercut a lot of emerging markets. So emerging

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Speaker 1: markets globally or down now. Everything's down now. But but

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Speaker 1: whenever you've seen that, you've seen that undercut equity markets,

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Speaker 1: particularly in emerging markets. With China, you know, China has

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Speaker 1: got its own complex issues, and I don't think the

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Speaker 1: US interest rates necessarily driving it. Certainly, it's not necessarily

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Speaker 1: US interest rates. UH. There has been, though, a slowdown,

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Speaker 1: which is perhaps part of the reason why interest rates

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Speaker 1: globally haven't arisen much more. And we're seeing that, certainly

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Speaker 1: in the manufacturing data that we got overnight. What do

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Speaker 1: you think of that data? And frankly the incredible response

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Speaker 1: to it with a negative reaction and equity markets and

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Speaker 1: and and a bit for bonds. So it really reminds

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Speaker 1: me of the beginning of two thousand sixteen, when obviously

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Speaker 1: markets were much stronger to begin two thousand sixteen, but

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Speaker 1: the first day of two thousand sixteen we saw a

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Speaker 1: negative p m I number manufacturing number from China. It

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Speaker 1: kicked off a correction in global markets, in the US markets. UH.

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Speaker 1: On the assumption, the widespread assumption that a slowing China

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Speaker 1: necessarily is bad news for the global economy, I don't

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Speaker 1: agree with that assumption. That's being well here's the thing.

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Speaker 1: What matters to the rest of the world is not

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Speaker 1: uh Chinese supply, it's Chinese demands. And normally in an economy,

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Speaker 1: these two things go together. The more you supply, the

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Speaker 1: more you can demand. But for a long time there's

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Speaker 1: been this need for a correction where China consumes more

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Speaker 1: relative to what it's it's producing. So slowdown in Chinese

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Speaker 1: output does not necessarily translate into a slowdown in Chinese demand.

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Speaker 1: In fact, it could actually translate in to a China

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Speaker 1: begins to run trade deficits and other things. So a

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Speaker 1: slowdown in China's over investment boom, which has driven a

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Speaker 1: lot of its growth, does not necessarily translate into a

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Speaker 1: slowdown for the rest of the world economy. But hasn't

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Speaker 1: China extended credit in the form of loans to a

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Speaker 1: variety of countries around the world financed infrastructure projects in

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Speaker 1: Latin America as well as in Africa. Are the Chinese

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Speaker 1: likely to continue to lend money if indeed they have

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Speaker 1: these issues that are domestic oriented. So again, whether that's

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Speaker 1: a good thing or a bad thing for the global

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Speaker 1: economy is an open question. I mean, obviously everybody likes

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Speaker 1: free money, but building out capacity has tended to boost

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Speaker 1: um input prices and suppress output prices, and so this

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Speaker 1: is you know, this is part of the imbalance in

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Speaker 1: the global economy that that has I think undercut a

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Speaker 1: lot of the growth potential in the world economy throughout

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Speaker 1: off this recovery. I'm I'm struggling though with this idea

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Speaker 1: that if China lowers its manufacturing output, it's going to

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Speaker 1: offset that with increases in other areas that will be

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Speaker 1: sufficient to keep that economy going to create the kind

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Speaker 1: of extra demand from the rest of the world that

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Speaker 1: you're talking about. In other words, is to indicate that

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Speaker 1: the economy is just slowing so much that this is

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Speaker 1: not going to be a powerhouse for the global economy,

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Speaker 1: which is how people are taking it. So China has

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Speaker 1: produced more and it's consumed for years, which is actually

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Speaker 1: part of the problem. It can afford to consume more

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Speaker 1: than it produces. It can afford to actually prop up

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Speaker 1: consumption in the face of of the kind of slowdown

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Speaker 1: that would normally undercut consumption in most economies of the world,

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Speaker 1: and that and there'll be a lot of political pressure

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Speaker 1: for them to do that. And that's why we've actually

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Speaker 1: started to see actually, uh, China's trade surplus disappear UM.

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Speaker 1: So not with the United States, not the bilateral I

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Speaker 1: was about to say, I remember seeing a lot of

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Speaker 1: ultilateral trade deficit UM. You know, it depends on how

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Speaker 1: much you believe the numbers, But there are indications that

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Speaker 1: they actually may be moving into deficit, which is actually

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Speaker 1: a positive thing for the global economy because it means

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Speaker 1: that China's finally demanding and mensurate with what it produces.

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Speaker 1: Do you believe that investors are too gloomy, too pessimistic

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Speaker 1: about specifically when it comes to US stocks. So I

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Speaker 1: take the concerns very seriously. But I just spent the

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Speaker 1: latter I write a quarterly letter and and it's not

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Speaker 1: out yet, But I but I looked at nine leading

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Speaker 1: indicators for the global for for the U S economy,

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Speaker 1: things that usually flash a recession warning before it happens. UM.

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Speaker 1: Six of them were no, three of them were maybe

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Speaker 1: early signs. UM if the yield curve inverted, one of

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Speaker 1: them would move from the O D s. I'm talking

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Speaker 1: about the ten year versus two years UM. But I'm

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Speaker 1: not seeing convincing evidence that we are on the car

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Speaker 1: of a recession as the market seems to think. What

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Speaker 1: I am seeing is uh the fact that equity prices

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Speaker 1: are the twelve month trailing P ratio for the SMP

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Speaker 1: five is now down from twenty one five twenty one

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Speaker 1: point five times a year ago to sixteen times UM.

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Speaker 1: What I'm also seeing as a blowout in the equity

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Speaker 1: risk premium, which is the additional amount based on casual

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Speaker 1: is the additional amount that you earn potentially earn on

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Speaker 1: equities over the long haul UM versus investing in treasuries

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Speaker 1: that has blown out to five point seven percent normally

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Speaker 1: that the average for the past fifty years or so

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Speaker 1: is four. That Typically when you see a wide equity

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Speaker 1: risk premium UM, it generally means that over the next

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Speaker 1: five years equities will outperform. So if I looked at

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Speaker 1: over the last going back to when the equity risk

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Speaker 1: premium was above five, the average annual return for five

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Speaker 1: years afterwards was eleven point two. If it was below

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Speaker 1: three point four percent, the average return with three. What

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Speaker 1: the reason why is because what's happening is that the

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Speaker 1: market is scared of the next recession, but it's pricing

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Speaker 1: in that risk adversity and that won't tell you that

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Speaker 1: that number, did I just said, won't tell you where

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Speaker 1: stocks will be a year from now, But if you're

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Speaker 1: more interested in where stocks will be five years from now,

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Speaker 1: it's a very interesting number. Thank you very much for

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Speaker 1: being with us. A pleasure. Patrick Chovanicki is an expert

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Speaker 1: when it comes to all things that China and trade related.

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Speaker 1: He is the managing director and chief strategist for Silver

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Speaker 1: Crest Asset Management. Shares of Tesla lower by about seven

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Speaker 1: and a half percent now. The company is cutting prices

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Speaker 1: to partially make up for the federal tax credit that

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Speaker 1: has been cut in half in the United States for

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Speaker 1: those vehicles. Here to tell us about the decline and

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Speaker 1: the company's future prospects is Kevin Tynan, our senior autos

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Speaker 1: analyst for Bloomberg Intelligence. Kevin, great to have you with us.

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Speaker 1: Happy New Year. Is that decline in the price of

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Speaker 1: Tesla stock connected to the discount that Tesla is offering.

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Speaker 1: They're willing to knock two thou dollars off the price

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Speaker 1: of an automobile because those tax credits are going away. Yeah.

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Speaker 1: My feeling is that's more the issue than say, the

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Speaker 1: production and delivery slight mess for the quarter. Um. You know,

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Speaker 1: keep in mind, this is a company that that needs

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Speaker 1: to um make margin, right, and they need to do

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Speaker 1: that while getting down to that thirty five tho dollar vehicle,

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Speaker 1: which opens up their addressable market considerably. So by taking

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Speaker 1: two thousand dollars off the sticker price, you're sort of

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Speaker 1: moving away from that that concept that Tesla is gonna

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Speaker 1: do gross margins, sell a vehicle at thirty five thousand

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Speaker 1: dollars and have this sort of infinite demand profile in

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Speaker 1: the US. I'm just wondering at what point all of

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Speaker 1: the bears will get flushed out and it will leave

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Speaker 1: sort of the hard, hard skinned Tesla believers. And my

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Speaker 1: point being basically, at what point can we say this

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Speaker 1: is real trading and this is sort of not just

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Speaker 1: sort of the believers versus the haters, right? I think

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Speaker 1: we're a long ways away from that, um you know.

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Speaker 1: And and automobile manufacturing is an industry, there's no finish line, right.

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Speaker 1: General Motors is bankrupt years later, uh to two years

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Speaker 1: removed from nine million units globally. So you know that's

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Speaker 1: why looking at these quarterly numbers, you say, as an analyst,

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Speaker 1: you want Tesla to be boring, right, just produce cell grow,

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Speaker 1: make margins, make profits. UH introduced new vehicles. So if

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Speaker 1: you look at at Leasta, there's one factory at this

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Speaker 1: point right talking about breaking ground on a China factory.

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Speaker 1: There's a company in the auto space. You need scale

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Speaker 1: right there, A long way away from scale. But that's

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Speaker 1: that's sort of my point is that it's still a

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Speaker 1: belief story. It isn't sort of an on the ground

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Speaker 1: number story. It's not like we're debating whether or not

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Speaker 1: they're going to meet this target or that target. We're

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Speaker 1: debating its viability, right, and not only that, you know

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Speaker 1: when when you look at it compared to other automakers,

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Speaker 1: and I hear this constantly that Tesla has no competition,

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Speaker 1: And that's correct because we're still discussing whether it's viable

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Speaker 1: or not. So if you look at the global automotive

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Speaker 1: space of a hundred million units, how big is the

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Speaker 1: battery electric vehicle a portion of it? Is it two million? Well,

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Speaker 1: most automakers are going to fight over the other and

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Speaker 1: leave that too to Tesla and whoever else wants to

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Speaker 1: invest in it. I find it very interesting Toyota has

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Speaker 1: never said electrification is the way to go. You know,

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Speaker 1: this is not a a small company or a not

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Speaker 1: intelligent company that's done a lot of things in the space.

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Speaker 1: So now if that segment is twenty million units, fifty

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Speaker 1: million units, now everybody rushes in. But we're at the

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Speaker 1: point right now where other automakers are saying, do I

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Speaker 1: want to fight over those that one percent, that two percent,

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Speaker 1: maybe it's even five percent. Is it worth the investment

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Speaker 1: in that space? All right? Three quick questions. How's the

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Speaker 1: build quality of and the reviews of all of the

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Speaker 1: Tesla vehicles? Well? Pretty good? Yeah, pretty good. You don't

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Speaker 1: get any bad marks for for the cars. No, and

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Speaker 1: and obviously everybody who has them loves them. Um, they

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Speaker 1: don't advertise, well they they're advertising. They don't pay for advertising,

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Speaker 1: That's what I mean. Okay, so that's number two. Number three.

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Speaker 1: Aren't governments around the world mandating the move from fossil

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Speaker 1: fuel from the internal combustion engine to some form of

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Speaker 1: either hybrid or electric vehicle vehicles? Okay, So that's a trifecta, right,

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Speaker 1: except if plug in hybrid winds up being the most

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Speaker 1: practical option there to say, we're still going to have

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Speaker 1: an internal combustion component. Look, battery pure battery electric might

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Speaker 1: not work for everybody, right in terms of recharging time,

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Speaker 1: the availability of of the charging stations. So again, I

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Speaker 1: think we're still a long ways away from this being

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Speaker 1: the majority of the new vehicle market globally. And then

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Speaker 1: there's of course the question of which companies will dominate

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Speaker 1: that given the fact that the majors in the US,

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Speaker 1: including GM, have sort of really laid their stake in

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Speaker 1: this ground. Also, so a lot of questions. Kevin Tynan,

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Speaker 1: You're gonna be answering them for us years to come,

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Speaker 1: and we are grateful for that. Kevin Tynan, a senior

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Speaker 1: autos analyst for Bloomberg Intelligence. Let's go back to late

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Speaker 1: last month when President Trump was tweeting about positive rumblings

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Speaker 1: between China and the US that possibly there'll be some

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Speaker 1: easing of the trade tensions. What would some sort of

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Speaker 1: trade agreement between the US and China actually look like

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Speaker 1: if there were to be something like that within the

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Speaker 1: next few months. Joining us now and Stevenson Yang, co

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Speaker 1: founder and research director at Jake Capital Research, also a

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Speaker 1: Bloomberg opinion columnists, thank you so much for being here.

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Speaker 1: And so, what would some sort of truth or agreement

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Speaker 1: look like at this point, given the vast span of

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Speaker 1: of topics and UH areas that that that the two

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Speaker 1: nations just agree on. Yeah, that's a great question. I

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Speaker 1: think that what has to be focused on is the

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Speaker 1: tech stuff z t E. Huawei, um in I pr agreements,

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Speaker 1: export controls, and not the low tech exports and the

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Speaker 1: trade gap. And what Trump tends to be personally focused

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Speaker 1: on is the trade gap which is actually widening UM

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Speaker 1: and will continue around the same in the in the

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Speaker 1: current year because the Chinese will depreciate the currency because

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Speaker 1: they'll be forced to UM. So I don't think that

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Speaker 1: that's where there should be a focus. Do you think

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Speaker 1: that we're going to cross that sort of crucial line

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Speaker 1: of seven, Yeah, exactly seven, because you know, look at

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Speaker 1: the Chinese economy, they're just it's just tumbling. UM. People

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Speaker 1: are going to be You're you're going to see a

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Speaker 1: big pick up in in UH in capital flight, and

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Speaker 1: the China's only defense will be to depreciate the currency. Now,

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Speaker 1: you have over twenty five years of expertise in China.

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Speaker 1: You were headed heading the US Information Technology Office in

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Speaker 1: the mid nineteen nineties and also the China operations of

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Speaker 1: the U S. China Business Council. You also wrote about

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Speaker 1: China's emergence and the back and forth of expansion and

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Speaker 1: retreat that China historically has expressed. I wonder if you

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Speaker 1: could expand on that and explain why that's relevant understanding

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Speaker 1: of China. Well, because I think that when China embarked

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Speaker 1: on its current opening phase in nineteen seventy nine, mainly

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Speaker 1: in the nineteen nineties, when China really started to accelerate,

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Speaker 1: it's its economic opening to the West. A lot of

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Speaker 1: international corporations and countries believe that China was in the

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Speaker 1: process of liberalizing and that the liberalization was open ended,

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Speaker 1: and then China ultimately would become sort of a Jeffersonian

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Speaker 1: democracy and a capitalist country. That is not at all

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Speaker 1: the case. It's trying to goes through these uh, these

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Speaker 1: cycles of opening and closing again. It opens when the

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Speaker 1: country needs cash, and that's what happened through the ES

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Speaker 1: and the twenty two thousands to date um and now

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Speaker 1: the cost is getting higher than the benefit, and so

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Speaker 1: you'll see China closing. All right. I want to go

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Speaker 1: to something that Patrick Shavannick said earlier in this show.

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Speaker 1: Patrick Shavannick is chiefe strategist of Silver Crest Asset Management

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Speaker 1: and has focused a lot on China, and he said

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Speaker 1: that a slowdown in China would not necessarily be a

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Speaker 1: bad thing for the rest of the world, especially if

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Speaker 1: it's a slowdown in manufacturing, which is what we're seeing,

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Speaker 1: since perhaps that will mean that they will actually import

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Speaker 1: war and reduce some of the imbalance that has sort

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Speaker 1: of been inherent in its growth. Do you agree. You know,

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Speaker 1: Pat has been talking about that for a while and

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Speaker 1: how how running through the foreign reserves would be a

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Speaker 1: good thing for China. Theoretically that is a good thing,

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Speaker 1: it's just not really politically in the cards. So will

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Speaker 1: China start to import more because it manufactures lesus? No.

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Speaker 1: What China will do is go through a dramatic depreciation

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Speaker 1: of the currency and then find that its own manufacturing

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Speaker 1: is more is more competitive, and then manufacture more. But

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Speaker 1: if they do do this competitive devaluation, that will ignite

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Speaker 1: a complete storm from Washington, d C. Will it not,

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Speaker 1: and aggravate the trade tensions to such a degree that

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Speaker 1: there could be potentially more ramifications on that side. It may.

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Speaker 1: I don't think that they're going to do it in

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Speaker 1: response to the US. In fact, I think they've been

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Speaker 1: holding up the currency to the extent they can in

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Speaker 1: order to uh, to to continue the trade negotiations with

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Speaker 1: the US. The problem is that, um, you know, trying

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Speaker 1: to trying to claims a little over three trillion and

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Speaker 1: foreign reserves. The the reality is that they have liquid

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Speaker 1: reserves of about one point one one point two trillion UM,

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Speaker 1: and so they don't have that much room to operate.

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Speaker 1: So they dropped by a hundred billion. You'll see them

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Speaker 1: depreciate very fast. What can you tell us about the

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Speaker 1: importance of the personal relationship that the president says he

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Speaker 1: has with Ping president of China? Nonsense? Uh, really, nonsense. Um.

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Speaker 1: I I do think that she didn't paying a little

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Speaker 1: bit fell for it, but she didn't paying also greatly

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Speaker 1: supported the election of Donald Trump, and I think now

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Speaker 1: is regretting it a lot. Is there anything that President

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Speaker 1: Trump has actually gotten for the US out of these

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Speaker 1: negotiations with China? You know, that's a good question. I

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Speaker 1: do think that it was high time that the United

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Speaker 1: States start to start to exert pressure on China for

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Speaker 1: its intellectual property theft and for the export controls violations

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Speaker 1: and those things. You know, Obama imposed or threatened to

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Speaker 1: impose sanctions two years before Trump came into office, but

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Speaker 1: never actually actualized the sanctions. There's been too long a

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Speaker 1: period when the United States has been a afraid of

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Speaker 1: losing business and so has been afraid to put pressure

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Speaker 1: on China, and it turns out actually to be effective.

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Speaker 1: The problem is what's the goal? You need to define

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Speaker 1: the goal and then exert pressure. What do investors get

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Speaker 1: wrong when they think about China? Mostly the consumer? The

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Speaker 1: investors have this idea that China is a place where

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Speaker 1: the consumer is uh is growing and spending more. That

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Speaker 1: you have companies like Ali Baba and j D and

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Speaker 1: everybody's spending money online. The consumer is just a rebranding

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Speaker 1: of what they used to call the masses um and

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Speaker 1: that you know they're going to buy this year, what

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Speaker 1: you tell them to buy this year, and what you

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Speaker 1: fund them to buy, and then they're going to stop

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Speaker 1: buying it. So going forward, what do you think is

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Speaker 1: going to be the story heading into trade agreement still

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Speaker 1: on the table? Well, I think that that Donald Trump

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Speaker 1: is going to back down, as he always backs down,

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Speaker 1: and there will be no new ARRA even after the

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Speaker 1: grace period. I think the big story of twenty nine though,

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Speaker 1: is going to be the sort of crash of the

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Speaker 1: Chinese economy. If indeed that takes place, will there be

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Speaker 1: a political reaction to distract or dissuade domestic forces in

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Speaker 1: China from focusing on that decline. I would have thought so,

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Speaker 1: it's a very opaque system. I would have thought that

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Speaker 1: that would have started quite some time ago. And I've

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Speaker 1: been surprised at the accommodating UH position that she didn't

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Speaker 1: Pink has taken. You'd think that that running out of cards,

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Speaker 1: that that's that would be what they would do, and

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Speaker 1: circle Taiwan, Uh go to the Spratley as you know,

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Speaker 1: this sort of thing. Well, just to pick up quickly

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Speaker 1: on that on the Taiwan issue, because in a speech

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Speaker 1: just recently, J. Pink speaks about that this is a reunification,

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Speaker 1: that's an irresistible trend. Well, it is something that clearly

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Speaker 1: he has focused his He he wants to be his legacy.

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Speaker 1: The question is if you take Taiwan, what do you

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Speaker 1: do with it? Nobody wants to fight a ground war

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Speaker 1: in Taiwan for twenty years. But there's also a question

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Speaker 1: as to whether the US would defend, and whether the

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Speaker 1: US can defend if the Chinese navy were too, for

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Speaker 1: example in circle, thank you very much for being with us.

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Speaker 1: And Stevenson Yang is co founder and research director of

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Speaker 1: j Capital Research, also a Bloomberg opinion columnist. Gold is

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Speaker 1: rallying and is actually at the highest level since June

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Speaker 1: of last year. Kind of interesting at a time when

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Speaker 1: a lot of people had written gold office perhaps not

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Speaker 1: acting as a store of value in the way it

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Speaker 1: once did. Joining us now, Frank Holmes, chief executive officer

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Speaker 1: in chief investment officer of US Global Investors, joining us

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Speaker 1: from San Antonio. Frank, thank you so much for being

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Speaker 1: with us. So let's start with the rally that we've

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Speaker 1: seen in gold. Does this sort of edify gold long

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Speaker 1: held sort of rule as a capital preservation tool. Absolutely,

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Speaker 1: and we're going back. Since the year two thousand billion

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Speaker 1: has performed the SMP two to one, and we can

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Speaker 1: see now for the last year it slowly outperformed the

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Speaker 1: SMP five the last quarter of the year as a

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Speaker 1: market unraveled, bullion had a spectacular run along with the

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Speaker 1: gold stocks. Well, Frank Holmes, if you have to choose

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Speaker 1: between gold stocks are actual physical gold, which would you hold.

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Speaker 1: It's a great question, Pam, and I've always advocated that

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Speaker 1: tem percent golden rule and five percent be into into

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Speaker 1: gold coins or g l D and the other five

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Speaker 1: percent of gold stocks because in a running gold gold

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Speaker 1: stocks can give you two to three times uh more performance.

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Speaker 1: So I guess that what I'm trying to understand right

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Speaker 1: now is, you know, are we going to see the

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Speaker 1: gold rally continue? Is this bearish kind of outlook going

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Speaker 1: to continue, or is gold going to potentially lose out

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Speaker 1: throughout the rest of this year as people realize that

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Speaker 1: we are actually headed towards armageddon. US profitability a company

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Speaker 1: is a still pretty good, and you know, perhaps we

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Speaker 1: got a little over our skis No. I think it's

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Speaker 1: the fifty seven trillion dollars in over a hundred and

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Speaker 1: fifty tillion dollars at global debt. That's a big issue

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Speaker 1: for people of looking at in a global basis. And

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Speaker 1: I also think that when we're witnessing is peak gold.

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Speaker 1: We had peak oil in two thousand and five, and

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Speaker 1: so the factors came along and and we're disruptive to

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Speaker 1: the supply of oil, but there's been no technological breakthrough

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Speaker 1: of even close to that equivalent in the mining sector,

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Speaker 1: in particular blinding gold, developing and producing, et cetera. So

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Speaker 1: we have this ongoing global demand for gold, both the

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Speaker 1: loved it than the fear trade, and you have supplied

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Speaker 1: as peaked and we're getting less and less from the minds.

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Speaker 1: They are lower grade, they are higher costs of shutting

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Speaker 1: them down. Uh. And the only way countries like South

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Speaker 1: Africa can be profitables by their currency to valuing to

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Speaker 1: be able to get a margin. Well, I'm glad you

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Speaker 1: mentioned currency is devaluing. And I'm wondering if the US

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Speaker 1: dollar loses strength, doesn't that mean that the price of gold,

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Speaker 1: at least on a nominal basis, will increase And if

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Speaker 1: the dollar loses value, that will make gold even more attractive.

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Speaker 1: In the blink of an eye, am In a blink

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Speaker 1: of an eye, gold will was just snap on that

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Speaker 1: on that trade. And I think that's just looking by

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Speaker 1: from here to June that rates will peak and any

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Speaker 1: sign of that you will see gold all of a

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Speaker 1: sudden start to resuscitate itself. And also quee, you know,

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Speaker 1: the unwinding of the Qui in the US was a

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Speaker 1: big fun flows went into bond and equities. And since

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Speaker 1: the QUI has basically been pushed back and there's a

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Speaker 1: retraction here. We're seeing this thought market unwind and we're

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Speaker 1: seeing gold all of a sudden rally the peak and

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Speaker 1: gold was basically when quei is one started when gold

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Speaker 1: hit nineteen hundred UM. The last time we had a

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Speaker 1: financial crisis two thousand and eight, gold was seven UH

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Speaker 1: and then by two thousand and eleven it has skyrock

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Speaker 1: the nine hundred before it fell back to a bother thousand.

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Speaker 1: So I think that gold is in a very strong

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Speaker 1: and a relative basis. Globally, we still have issues the

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Speaker 1: eu Brexit UH, and we have this trade war, and

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Speaker 1: we can do to see more central banks buying gold.

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Speaker 1: Many of the Eastern European economies like Hungary and Poland

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Speaker 1: shown up for the first time buying uh tons of gold. Yeah. Well,

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Speaker 1: one thing I have to think about, Frank, because you

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Speaker 1: manage a fund that that focuses on precious medals, but

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Speaker 1: you also manage a fund that has to do with

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Speaker 1: the airline industry and manufacturing. And just real quick here,

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Speaker 1: do you expect the sort of opposite to be true

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Speaker 1: that manufacturing companies and airline companies are going to struggle

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Speaker 1: because ultimately the bid for gold comes from a pretty

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Speaker 1: bearish place in the economy. Well, you know, it's it's

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Speaker 1: something that's very contrarian. I would share with you that

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Speaker 1: from two thousand and one gold went from two hundred

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Speaker 1: and fifty dollars to seven hundred uh to two thousand

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Speaker 1: and eight, so we had a strong global economy and

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Speaker 1: gold did participate quite well in that rally. So I

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Speaker 1: don't think you just market off as being you know,

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Speaker 1: bear both that's the fear trade. What's really important is

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Speaker 1: that sixt gold demand is love, and love comes from Shindia,

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Speaker 1: which is of the world's population. It's actually known as

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Speaker 1: China and India, and it's highly correly to the rising

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Speaker 1: GDP per capita in those two countries. All of a

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Speaker 1: sudden you get greater increases in gold gift giving. Well done,

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Speaker 1: Thanks very much, Frank Holmes, wishing you happy New year.

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Speaker 1: Gold right now is higher by about a half percent

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Speaker 1: of about six seven dollars announced dollars for an ounce

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Speaker 1: of gold. Many thanks to Frank Holmes, chief executive and

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Speaker 1: chief investment officer for US Global Investors. Thanks for listening.

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Speaker 1: To the Bloomberg P and L podcast. You can subscribe

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00:27:18,600 --> 00:27:22,200
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever

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00:27:22,280 --> 00:27:25,760
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter

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00:27:26,040 --> 00:27:29,760
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits one.

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Speaker 1: Before the podcast, you can always catch us worldwide on

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Speaker 1: Bloomberg Radio