1 00:00:00,400 --> 00:00:03,840 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:04,120 --> 00:00:13,920 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:14,000 --> 00:00:17,960 Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah pons, 4 00:00:18,280 --> 00:00:21,320 Speaker 1: a reporter on the Cross Asset team, and I'm Mike Reagan, 5 00:00:21,480 --> 00:00:24,159 Speaker 1: a senior editor at Bloomberg. And you can think of 6 00:00:24,200 --> 00:00:27,960 Speaker 1: me as the bon Iver to Sarah's Taylor Swift. There 7 00:00:28,000 --> 00:00:33,360 Speaker 1: we go, Mike, I believe it's bony verking. I finally 8 00:00:33,400 --> 00:00:38,120 Speaker 1: had a contemporary reference, and I totally bone boni vera. 9 00:00:38,159 --> 00:00:40,320 Speaker 1: I believe that's how it's pronounced. Maybe I'm wrong, but 10 00:00:40,360 --> 00:00:42,800 Speaker 1: I'm pretty sure for all of us fans of the 11 00:00:42,800 --> 00:00:45,920 Speaker 1: new Taylor Swift album, Mike had a good pairing for 12 00:00:46,400 --> 00:00:51,000 Speaker 1: my coming back from my week off. But this week 13 00:00:51,040 --> 00:00:53,519 Speaker 1: on the show, Mike, a pioneer of research on the 14 00:00:53,600 --> 00:00:56,120 Speaker 1: yield curve, now has some words of wisdom to share 15 00:00:56,120 --> 00:00:59,240 Speaker 1: about gold as the spot price of the precious metal 16 00:00:59,320 --> 00:01:01,880 Speaker 1: trades at rerec levels. Our guests wrote a paper on 17 00:01:01,960 --> 00:01:05,400 Speaker 1: gold just this month, and he says massive passive ownership 18 00:01:05,760 --> 00:01:09,800 Speaker 1: could possibly lead to a period of quote unquote irrational exuberance, 19 00:01:10,440 --> 00:01:13,000 Speaker 1: and as always, will close out the episode with our 20 00:01:13,000 --> 00:01:16,280 Speaker 1: tradition the craziest thing I saw in markets this week. 21 00:01:16,400 --> 00:01:19,040 Speaker 1: So if you saw something crazy and want to give 22 00:01:19,120 --> 00:01:20,880 Speaker 1: us a heads up, give us a call on the 23 00:01:20,880 --> 00:01:25,479 Speaker 1: Bloomberg Podcast hotline at six four six three to four 24 00:01:26,120 --> 00:01:29,120 Speaker 1: three four nine, oh, and leave us a voicemail. Maybe 25 00:01:29,200 --> 00:01:31,920 Speaker 1: we'll play it on the show. And as far as 26 00:01:31,920 --> 00:01:35,399 Speaker 1: you mentioned, you're back from vacation. Uh, listeners don't realize this, 27 00:01:35,440 --> 00:01:38,400 Speaker 1: but you're also back in New York City, back in 28 00:01:38,480 --> 00:01:42,319 Speaker 1: your apartment. I think the last time we recorded a 29 00:01:42,400 --> 00:01:44,960 Speaker 1: podcast with you in your apartment, your neighbors started playing 30 00:01:45,000 --> 00:01:48,160 Speaker 1: some jazz upstairs. So I'm kind of I'm figures across. 31 00:01:48,160 --> 00:01:50,559 Speaker 1: I'm kind of hoping that happens again. If we're lucky, 32 00:01:50,600 --> 00:01:53,000 Speaker 1: maybe he'll play some Taylor Swift. Trust. That's that's right. 33 00:01:53,800 --> 00:01:55,680 Speaker 1: And I you know, I was watching some videos of 34 00:01:55,760 --> 00:01:58,440 Speaker 1: our guests this week and I noticed he has which, uh, 35 00:01:58,800 --> 00:02:01,160 Speaker 1: you know, there's this service or this thing on Twitter, 36 00:02:01,200 --> 00:02:03,040 Speaker 1: and it's not a service. It's some guy on Twitter 37 00:02:03,640 --> 00:02:06,680 Speaker 1: called room Raider Sarah where they go and they look 38 00:02:06,720 --> 00:02:09,480 Speaker 1: at the rooms people are doing their zoom meetings from 39 00:02:10,120 --> 00:02:12,200 Speaker 1: our guests this week has one of the coolest rooms 40 00:02:12,240 --> 00:02:15,680 Speaker 1: I've seen, very well appointed. But I think there's either 41 00:02:15,919 --> 00:02:18,840 Speaker 1: a cello or a stand up base behind him, So 42 00:02:18,960 --> 00:02:21,840 Speaker 1: maybe he'll get on and jam with the guy above 43 00:02:21,919 --> 00:02:24,920 Speaker 1: you if if the jazz breaks out, that's what I'm hoping. 44 00:02:25,280 --> 00:02:27,200 Speaker 1: Let's introduced our guests and see if his his room 45 00:02:27,240 --> 00:02:29,119 Speaker 1: has been rated. I personally give it a high rating 46 00:02:29,120 --> 00:02:31,359 Speaker 1: because I was watching his videos and I kept get 47 00:02:31,520 --> 00:02:35,679 Speaker 1: getting distracted by his uh his cool room. Anyway. He 48 00:02:35,840 --> 00:02:39,040 Speaker 1: is a finance professor at Duke University's Business School. He's 49 00:02:39,040 --> 00:02:43,240 Speaker 1: also a senior advisor at Research Affiliates. You may remember 50 00:02:43,360 --> 00:02:46,239 Speaker 1: him from the show about a year ago. He was 51 00:02:46,320 --> 00:02:48,399 Speaker 1: a guest, and we're gonna talk to him a little 52 00:02:48,400 --> 00:02:49,840 Speaker 1: bit about some of the things he had to say 53 00:02:49,919 --> 00:02:53,720 Speaker 1: back then because uh, they ended up being pretty prescient. Anyway, 54 00:02:53,760 --> 00:02:56,239 Speaker 1: his name is Cam Harvey Kim. Welcome to the show. 55 00:02:56,600 --> 00:02:59,760 Speaker 1: Great to be on the show. Okay, I wanted to 56 00:02:59,760 --> 00:03:03,040 Speaker 1: start enough. Sarah talked about this new paper you have 57 00:03:03,280 --> 00:03:07,960 Speaker 1: out on the Gold and it's pretty fascinating to me because, 58 00:03:08,000 --> 00:03:10,400 Speaker 1: as you point out in some of the discussions about 59 00:03:10,400 --> 00:03:13,919 Speaker 1: this paper, Gold, we have a data set that goes 60 00:03:14,040 --> 00:03:17,200 Speaker 1: back I don't know what thousands of years. Basically, you know, 61 00:03:17,480 --> 00:03:19,480 Speaker 1: if you if you want to know the price of 62 00:03:19,639 --> 00:03:23,120 Speaker 1: gold in Roman times, we know what it was. And 63 00:03:23,240 --> 00:03:26,320 Speaker 1: one of the really interesting things, as Sarah point out, 64 00:03:26,320 --> 00:03:29,040 Speaker 1: I tend to latch onto the craziest things in reports 65 00:03:29,120 --> 00:03:31,600 Speaker 1: like this, and one of the craziest and most interesting 66 00:03:31,680 --> 00:03:35,640 Speaker 1: things you pointed out was that the price of gold 67 00:03:35,960 --> 00:03:40,480 Speaker 1: paid as a wage two soldiers in ancient Rome, if 68 00:03:40,520 --> 00:03:43,600 Speaker 1: you translate it to sort of the modern value of 69 00:03:43,720 --> 00:03:48,040 Speaker 1: gold today, it's basically similar to the wage that an 70 00:03:48,080 --> 00:03:50,800 Speaker 1: officer in the army would be making right now if 71 00:03:50,840 --> 00:03:53,160 Speaker 1: they were paid in gold, which to me kind of 72 00:03:53,280 --> 00:03:56,800 Speaker 1: blows my mind, uh, since it sort of backs up 73 00:03:57,240 --> 00:04:00,320 Speaker 1: one of the common theses for go old and that 74 00:04:00,440 --> 00:04:04,720 Speaker 1: it's it's a good store of value. Um. Clearly it's 75 00:04:04,760 --> 00:04:09,760 Speaker 1: hedged inflation on wages since Roman times, but as you 76 00:04:09,840 --> 00:04:13,600 Speaker 1: also point out, it's a very unreliable inflation hedge. I 77 00:04:13,640 --> 00:04:17,160 Speaker 1: guess if you're holding period is measured in centuries, it's perfect, 78 00:04:17,640 --> 00:04:22,239 Speaker 1: but otherwise it's not as a reliable uh store value 79 00:04:22,320 --> 00:04:27,000 Speaker 1: inflation hedge as people might think. Walk us through basically 80 00:04:27,120 --> 00:04:29,800 Speaker 1: the main points of that paper along those lines, because 81 00:04:29,839 --> 00:04:32,920 Speaker 1: I really find it to be a really fascinating look 82 00:04:33,120 --> 00:04:37,160 Speaker 1: on something that has been a cornerstone of financial assets 83 00:04:37,240 --> 00:04:42,520 Speaker 1: for forever pretty much. Sure, and essentially two papers, um 84 00:04:42,920 --> 00:04:46,719 Speaker 1: and my paper of two thousand thirteen in the Financial 85 00:04:46,720 --> 00:04:50,080 Speaker 1: Analyst Journal with Claude Herb we actually did this exercise 86 00:04:50,240 --> 00:04:54,880 Speaker 1: that you described that the Romans kept great records and 87 00:04:55,680 --> 00:04:59,679 Speaker 1: you could figure out exactly what a Roman centurion was paid, 88 00:05:00,200 --> 00:05:02,640 Speaker 1: and we actually have the coins so you can figure 89 00:05:02,640 --> 00:05:05,640 Speaker 1: out what the gold content or the silver content actually is, 90 00:05:06,200 --> 00:05:09,560 Speaker 1: and we worked out that they were paid thirty eight 91 00:05:10,240 --> 00:05:14,200 Speaker 1: troy ounces of gold a year and and you're right 92 00:05:14,320 --> 00:05:18,640 Speaker 1: that that's approximately the wage of a US Army captain. 93 00:05:19,240 --> 00:05:23,640 Speaker 1: So that means that gold has held its value. Um, 94 00:05:23,960 --> 00:05:27,600 Speaker 1: we've got another example of a loaf bread from the 95 00:05:27,720 --> 00:05:30,920 Speaker 1: time of Nebuka desert, so it's even earlier, and that 96 00:05:31,080 --> 00:05:34,320 Speaker 1: translates into about five dollars and fifty cents um in 97 00:05:34,480 --> 00:05:37,400 Speaker 1: terms of the gold equivalent today, which is about what 98 00:05:37,560 --> 00:05:40,800 Speaker 1: I pay at a boutique bakery for a high end 99 00:05:40,880 --> 00:05:44,080 Speaker 1: a loaf of bread. So over the very long term, 100 00:05:44,600 --> 00:05:48,840 Speaker 1: gold is something that holds its value. So another way 101 00:05:49,320 --> 00:05:53,240 Speaker 1: to think about this is that the inflation adjusted value 102 00:05:53,279 --> 00:05:56,440 Speaker 1: of gold is approximately constant are three times, so it 103 00:05:56,520 --> 00:06:01,400 Speaker 1: doesn't degrade. But the problem is that gold is volatile. 104 00:06:01,839 --> 00:06:05,000 Speaker 1: So gold has the same volatility as the SNP five. 105 00:06:05,800 --> 00:06:10,000 Speaker 1: So there can be large swims in value where it 106 00:06:10,200 --> 00:06:14,320 Speaker 1: is a poor inflation hedge for decades or potentially centuries, 107 00:06:14,680 --> 00:06:16,440 Speaker 1: and then all of a sudden it's a good inflation 108 00:06:16,520 --> 00:06:20,280 Speaker 1: hedge for a decade or maybe a century. So it's 109 00:06:20,560 --> 00:06:25,200 Speaker 1: very unreliable in terms of hedge and inflation. So we've 110 00:06:25,279 --> 00:06:28,760 Speaker 1: seen this pretty mad rush to gold in recent weeks. 111 00:06:28,839 --> 00:06:31,800 Speaker 1: I mean your paper recently you looked at the inflation 112 00:06:31,839 --> 00:06:34,960 Speaker 1: adjusted price of gold near the highs of nine eighties, 113 00:06:35,160 --> 00:06:39,040 Speaker 1: right at the levels that we saw back inn. If 114 00:06:39,160 --> 00:06:44,200 Speaker 1: gold currently is priced at such high levels relative to inflation, 115 00:06:45,120 --> 00:06:48,760 Speaker 1: should investors rightly be believing that this will actually be 116 00:06:49,440 --> 00:06:54,600 Speaker 1: a good inflation hedge going forwards. So again, our analysis 117 00:06:54,880 --> 00:06:59,400 Speaker 1: and our most recent paper which was just posted, actually 118 00:06:59,520 --> 00:07:02,440 Speaker 1: it was the day of gold's all time high that 119 00:07:02,560 --> 00:07:07,160 Speaker 1: we posted this paper. And so uh, and this is 120 00:07:07,560 --> 00:07:10,760 Speaker 1: also with claud Urban and taught us Wisconta. And we 121 00:07:10,840 --> 00:07:17,200 Speaker 1: do not then gold um gold in I guess uh, 122 00:07:17,720 --> 00:07:21,240 Speaker 1: nineteen eighty in today's prices was about two thousand, two 123 00:07:21,320 --> 00:07:25,520 Speaker 1: hundred and in two thousand eleven, in August it was 124 00:07:25,560 --> 00:07:28,520 Speaker 1: about two thousand, one hundred, So we're very close to 125 00:07:28,640 --> 00:07:33,240 Speaker 1: the all time high in UH inflation adjusted terms. So 126 00:07:33,640 --> 00:07:36,680 Speaker 1: we hit an a nominal high UH, not taking the 127 00:07:36,720 --> 00:07:40,360 Speaker 1: inflation into a camp, but in nineteen eighty it was 128 00:07:40,720 --> 00:07:45,480 Speaker 1: It was definitely bad news for investors. If you're buying 129 00:07:45,560 --> 00:07:48,320 Speaker 1: in nineteen eighty, over the next five years, you lost 130 00:07:48,400 --> 00:07:52,600 Speaker 1: fifty If you're a buyer in two thousand and eleven 131 00:07:52,840 --> 00:07:55,920 Speaker 1: in August, over the next five years, you lost twenty 132 00:07:56,080 --> 00:08:00,280 Speaker 1: eight percent. So what you see, and this is in 133 00:08:00,360 --> 00:08:03,400 Speaker 1: our paper, what do you see are these fluctuations. So 134 00:08:03,560 --> 00:08:07,200 Speaker 1: we look at the average inflation adjusted price, and sometimes 135 00:08:07,280 --> 00:08:11,600 Speaker 1: you're above and sometimes you're below, but there's a tendency 136 00:08:11,880 --> 00:08:16,320 Speaker 1: to revert to the mean, and right now we're way 137 00:08:16,720 --> 00:08:20,800 Speaker 1: above that average price. So think of that average price 138 00:08:21,320 --> 00:08:27,720 Speaker 1: as the constant inflation adjusted price of gold. Sometimes you're above, 139 00:08:28,040 --> 00:08:33,720 Speaker 1: sometimes you're below, and today you're way above. Okay. One 140 00:08:33,760 --> 00:08:36,800 Speaker 1: of the things you talk about is UH. You know, 141 00:08:36,960 --> 00:08:40,040 Speaker 1: you sort of quote Warren Buffett and describe them as 142 00:08:40,200 --> 00:08:44,880 Speaker 1: as bandwagon type of investors who pile into gold because 143 00:08:44,960 --> 00:08:46,880 Speaker 1: it's had such a good run sort of. I guess 144 00:08:46,920 --> 00:08:50,280 Speaker 1: you could consider them momentum investors to some degree. Um 145 00:08:50,400 --> 00:08:54,520 Speaker 1: and you talk about how um the ETFs holding gold 146 00:08:54,760 --> 00:08:58,599 Speaker 1: perhaps play uh, playing a large role in this this 147 00:08:58,720 --> 00:09:01,319 Speaker 1: boom in the prices. Now to me, I would think, well, 148 00:09:01,440 --> 00:09:04,040 Speaker 1: if ETFs are here to stay, that's kind of a 149 00:09:04,160 --> 00:09:09,920 Speaker 1: permanent new source of investors and speculators in gold. Would 150 00:09:09,960 --> 00:09:13,920 Speaker 1: that suggest to sort of a permanent higher inflation adjusted 151 00:09:14,080 --> 00:09:18,400 Speaker 1: price or would it suggest more of the violatility you're 152 00:09:18,440 --> 00:09:22,040 Speaker 1: talking about? Would it perhaps accentuate the volatility when there 153 00:09:22,160 --> 00:09:24,480 Speaker 1: is all this money in e t f s chasing gold. 154 00:09:25,240 --> 00:09:30,199 Speaker 1: So basically what we do in our paper is the 155 00:09:30,360 --> 00:09:35,600 Speaker 1: show that there's a very strong correlation between the real 156 00:09:35,760 --> 00:09:38,240 Speaker 1: price of gold, or the inflation adjusted press of gold, 157 00:09:38,760 --> 00:09:42,800 Speaker 1: and the number of Troy ounces that the leading gold 158 00:09:42,960 --> 00:09:47,800 Speaker 1: ETFs hold. So this time might be different, as you say, 159 00:09:47,920 --> 00:09:53,280 Speaker 1: So we didn't have any gold e t s and 160 00:09:53,640 --> 00:09:56,400 Speaker 1: retail investors the whole gold It was very difficult to do. 161 00:09:56,800 --> 00:10:01,160 Speaker 1: You can buy coins, but they're very expense of relative 162 00:10:01,240 --> 00:10:03,679 Speaker 1: to the bullion price. You can buy bullion, but then 163 00:10:03,760 --> 00:10:05,839 Speaker 1: you have to vault it and pay for that, and 164 00:10:05,880 --> 00:10:09,319 Speaker 1: it's really difficult to buy and sell gold. So the 165 00:10:09,400 --> 00:10:13,280 Speaker 1: e t s made it a lot easier for investors 166 00:10:13,559 --> 00:10:18,440 Speaker 1: to actually hold gold and UM. And they do think 167 00:10:18,600 --> 00:10:22,000 Speaker 1: that in the diversified portfolio, people should have some real 168 00:10:22,080 --> 00:10:24,319 Speaker 1: assets and gold is one of those real assets, and 169 00:10:24,679 --> 00:10:28,520 Speaker 1: other commodities, real estate, things like that makes sense. The 170 00:10:28,640 --> 00:10:32,800 Speaker 1: problem is the following. The problem is that this strong 171 00:10:32,880 --> 00:10:38,080 Speaker 1: correlation between the price and the holdings of the gold 172 00:10:38,160 --> 00:10:42,559 Speaker 1: ETFs is very suggestive of the following type of behavior. 173 00:10:43,320 --> 00:10:48,319 Speaker 1: As the price goes up, investors buy more, and that 174 00:10:48,440 --> 00:10:52,360 Speaker 1: the price goes up even more, investors continue to buy. 175 00:10:52,920 --> 00:10:56,959 Speaker 1: And this is the opposite to what I teach. So 176 00:10:57,280 --> 00:11:01,719 Speaker 1: what I teach is a good investments strategy is to 177 00:11:01,960 --> 00:11:06,040 Speaker 1: buy low and sell high. It appears what's going on 178 00:11:06,240 --> 00:11:10,160 Speaker 1: here is that investors are buying high. And I do 179 00:11:10,320 --> 00:11:14,160 Speaker 1: quote buffets of famous line and and that is um. 180 00:11:14,600 --> 00:11:19,360 Speaker 1: He's referring to gold investors as bandwagon investors, and he says, 181 00:11:19,480 --> 00:11:24,520 Speaker 1: as bandwagan investors join any party, they create their own 182 00:11:24,600 --> 00:11:29,079 Speaker 1: truth for a while. And what that means is that 183 00:11:30,000 --> 00:11:33,520 Speaker 1: you see the price going up, you jump on the bandwagon. 184 00:11:33,640 --> 00:11:36,680 Speaker 1: You buy some of the gold DTF, and the gold 185 00:11:36,720 --> 00:11:40,600 Speaker 1: TTF has to purchase gold and the price actually goes up, 186 00:11:41,160 --> 00:11:45,640 Speaker 1: and that is creating their own truth. Their investment thesis 187 00:11:46,000 --> 00:11:49,160 Speaker 1: is validated as the price goes up, but the party 188 00:11:49,440 --> 00:11:54,319 Speaker 1: just doesn't last forever. So I do worry about this. 189 00:11:54,559 --> 00:11:57,679 Speaker 1: You mentioned, Uh, this is like a momentum effect and 190 00:11:57,800 --> 00:12:01,719 Speaker 1: not quite um trend fall Followers are really careful on this, 191 00:12:02,320 --> 00:12:06,080 Speaker 1: and that when the trend is really really strong, they 192 00:12:06,280 --> 00:12:11,320 Speaker 1: d risk. So this is much different than a bandwagon 193 00:12:11,920 --> 00:12:15,640 Speaker 1: effect where people just piling into this risky asset. And 194 00:12:15,679 --> 00:12:18,200 Speaker 1: to be clear, this is just like a risk asset. 195 00:12:18,559 --> 00:12:24,599 Speaker 1: Look in March of the stock market tanked, gold plummeted, 196 00:12:25,320 --> 00:12:31,079 Speaker 1: and the new gold bitcoin lost over its value. And 197 00:12:31,160 --> 00:12:33,720 Speaker 1: then when we got to risk on, people got more 198 00:12:33,800 --> 00:12:37,360 Speaker 1: comfortable that we're gonna get through the COVID nineteen. Uh, 199 00:12:37,480 --> 00:12:40,640 Speaker 1: the stock market goes up and gold goes up. So 200 00:12:40,800 --> 00:12:45,480 Speaker 1: this is just a speculative tool. And as for speculation, 201 00:12:45,559 --> 00:12:47,679 Speaker 1: there will be some winners and there's going to be 202 00:12:47,800 --> 00:13:04,880 Speaker 1: some loosers. I was looking at total assets in g 203 00:13:05,040 --> 00:13:07,600 Speaker 1: l D which is a really popular GOLDDTF just now 204 00:13:07,840 --> 00:13:11,120 Speaker 1: well recently hitting a record high above eighty billion dollars. 205 00:13:11,240 --> 00:13:13,880 Speaker 1: So it's pretty unbelievable. But Cam, I want to get 206 00:13:13,920 --> 00:13:16,200 Speaker 1: your take because I feel like whenever we hear from 207 00:13:16,240 --> 00:13:19,640 Speaker 1: investors lately who are now bullish on gold, pretty much 208 00:13:19,679 --> 00:13:22,680 Speaker 1: every single time, they point to the level of real 209 00:13:22,760 --> 00:13:25,920 Speaker 1: interest rates right now tenual real yield at negative one 210 00:13:25,960 --> 00:13:29,560 Speaker 1: percent or so, at record lows. How do you factor 211 00:13:29,800 --> 00:13:35,640 Speaker 1: this in to any analysis on gold and what we 212 00:13:35,800 --> 00:13:39,920 Speaker 1: might see as it pertains to volatility in real assets 213 00:13:40,080 --> 00:13:42,120 Speaker 1: when you consider the fact that we do have real 214 00:13:42,200 --> 00:13:45,439 Speaker 1: interest rates at levels pretty much never seen before. So 215 00:13:46,520 --> 00:13:51,839 Speaker 1: we've addressed this and there it is true that since 216 00:13:52,000 --> 00:13:55,240 Speaker 1: let's say two thousand and four, there is a strong 217 00:13:55,360 --> 00:13:58,920 Speaker 1: negative correlation between the price of gold and the level 218 00:13:59,120 --> 00:14:03,520 Speaker 1: of real or or nominal interest rates, so that correlation 219 00:14:03,960 --> 00:14:09,440 Speaker 1: is really clear. However, that correlation is unstable, so if 220 00:14:09,480 --> 00:14:12,679 Speaker 1: you go back before two thousand and four, that correlation 221 00:14:13,240 --> 00:14:17,559 Speaker 1: could be zero or it could be positive. So looking 222 00:14:17,600 --> 00:14:19,960 Speaker 1: at the most recent data, you need to be really 223 00:14:20,120 --> 00:14:25,480 Speaker 1: careful because that correlation could be what we call spurious. 224 00:14:26,080 --> 00:14:29,240 Speaker 1: So I'd be very very careful on this. I'm much 225 00:14:29,320 --> 00:14:33,080 Speaker 1: more faith in our analysis of the holdings of gold 226 00:14:33,200 --> 00:14:35,800 Speaker 1: e t s. That kind of makes sense. They're holding 227 00:14:35,840 --> 00:14:38,400 Speaker 1: more gold, they gotta buy more gold. And uh, the 228 00:14:38,560 --> 00:14:42,680 Speaker 1: price it is positively correlated with that. So yes, there 229 00:14:42,920 --> 00:14:47,760 Speaker 1: is using the most recent data um this negative correlation 230 00:14:47,920 --> 00:14:52,840 Speaker 1: between the rates and and gold prices. But I would 231 00:14:53,000 --> 00:14:56,160 Speaker 1: just be pretty pretty careful on that. Okay, one more 232 00:14:56,280 --> 00:14:57,760 Speaker 1: question on gold and then I think we want to 233 00:14:57,800 --> 00:15:00,520 Speaker 1: move on to the yield curve. And I know you know, 234 00:15:00,920 --> 00:15:03,440 Speaker 1: a guy like you, you like to study the math, 235 00:15:03,720 --> 00:15:07,560 Speaker 1: the statistical relationships, and the and the hard data, So 236 00:15:07,720 --> 00:15:10,400 Speaker 1: this might be a question that is not answerable from 237 00:15:10,600 --> 00:15:12,920 Speaker 1: that sort of approach, But I'm just curious if you 238 00:15:13,040 --> 00:15:15,680 Speaker 1: have thoughts on it. And it's something that's I've never 239 00:15:15,800 --> 00:15:17,920 Speaker 1: quite been able to wrap my head around when it 240 00:15:18,000 --> 00:15:22,040 Speaker 1: comes to gold. Is what explains the appeal of gold 241 00:15:22,440 --> 00:15:25,440 Speaker 1: over literally centuries? Like you said, why why is it 242 00:15:25,600 --> 00:15:28,360 Speaker 1: that Roman soldiers were willing to get paid in gold 243 00:15:28,480 --> 00:15:32,080 Speaker 1: way back when and that value of that pay day 244 00:15:32,160 --> 00:15:34,680 Speaker 1: is the same as it is today. I mean, does 245 00:15:34,720 --> 00:15:37,720 Speaker 1: it all relate back just to the simple sort of 246 00:15:37,800 --> 00:15:41,760 Speaker 1: physical demand for gold that it's it's a shiny, pretty metal, 247 00:15:41,880 --> 00:15:44,560 Speaker 1: it's good for jewelry. Is it all? Does it all 248 00:15:44,640 --> 00:15:47,560 Speaker 1: hinge around that? Do you think? Or is it just 249 00:15:47,680 --> 00:15:50,680 Speaker 1: impossible to explain? It is true? That gold has been 250 00:15:50,680 --> 00:15:54,360 Speaker 1: around for thousands of years, and I think part of 251 00:15:54,440 --> 00:15:59,320 Speaker 1: it is that it does have this usefulness. So gold 252 00:15:59,560 --> 00:16:04,080 Speaker 1: seventy percent of gold is using jewelry. Um, it's used 253 00:16:04,200 --> 00:16:08,200 Speaker 1: in some electronic parts also, so there is actually utility 254 00:16:08,360 --> 00:16:11,520 Speaker 1: directly associated with gold. But I think part of the 255 00:16:11,600 --> 00:16:15,760 Speaker 1: story is the safe haven to this, uh, this mystique 256 00:16:15,880 --> 00:16:21,320 Speaker 1: that gold is the ultimate safe haven. So in in 257 00:16:21,440 --> 00:16:27,920 Speaker 1: our research we actually um reject that hypothesis. And we've 258 00:16:27,960 --> 00:16:32,880 Speaker 1: got this great example UM called the Hawksknew Horde and 259 00:16:33,080 --> 00:16:38,120 Speaker 1: it's from the countryside of England. Somebody's repairing offense and 260 00:16:38,280 --> 00:16:41,680 Speaker 1: they dropped their hand. They look down and pick up 261 00:16:41,760 --> 00:16:46,320 Speaker 1: the hammer, but they see a gold coin. They scrape 262 00:16:46,360 --> 00:16:51,040 Speaker 1: the ground and they see more gold coins. Uh. This 263 00:16:51,520 --> 00:16:54,400 Speaker 1: this's can only happen in England. But they immediately go 264 00:16:54,520 --> 00:16:59,080 Speaker 1: to the university and seek out an archaeologist and they 265 00:16:59,200 --> 00:17:04,160 Speaker 1: excavate and they find this treasure chest field with gold 266 00:17:04,920 --> 00:17:08,320 Speaker 1: and they dated to the time that the Romans were 267 00:17:08,440 --> 00:17:13,879 Speaker 1: leaving England. So basically this was the safe haven. So 268 00:17:14,160 --> 00:17:17,080 Speaker 1: some family, uh, they took their wealth, they buried it 269 00:17:17,800 --> 00:17:20,840 Speaker 1: in the field, in the treasure chest. And the fact 270 00:17:20,960 --> 00:17:25,679 Speaker 1: that we discovered it recently shows that it failed as 271 00:17:25,720 --> 00:17:28,840 Speaker 1: a safe haven, that family never got access to it. 272 00:17:29,200 --> 00:17:32,480 Speaker 1: So there is this mystique of a safe haven. There 273 00:17:32,600 --> 00:17:37,119 Speaker 1: is this, uh, this myth the gold is a short 274 00:17:37,280 --> 00:17:40,720 Speaker 1: term inflation hedge when it isn't. So I think that 275 00:17:40,880 --> 00:17:44,920 Speaker 1: gold is is very poorly understood. But you're correct that 276 00:17:45,320 --> 00:17:49,359 Speaker 1: given that it's got such a long history and is 277 00:17:49,520 --> 00:17:53,720 Speaker 1: part of our history, that uh, that it gets treated 278 00:17:53,800 --> 00:18:00,200 Speaker 1: differently and people are willing to ignore the evidence. This okay, 279 00:18:00,240 --> 00:18:01,719 Speaker 1: And we really can't have you on the show, as 280 00:18:01,760 --> 00:18:05,439 Speaker 1: Mike alluded to, without discussing the yield curve. You are 281 00:18:05,480 --> 00:18:07,960 Speaker 1: one of the pioneers of doing research on the subject. 282 00:18:08,320 --> 00:18:12,640 Speaker 1: Your dissertation on the subject is also very very widely cited, 283 00:18:13,080 --> 00:18:15,159 Speaker 1: and we had you on the show to discuss it 284 00:18:15,840 --> 00:18:19,120 Speaker 1: last mayor so. And of course, after the yield curve 285 00:18:19,200 --> 00:18:23,840 Speaker 1: inverted last year, we did achieve or accession. Now, of course, 286 00:18:24,000 --> 00:18:26,520 Speaker 1: this could all be seen as hoopla or whatever you 287 00:18:26,680 --> 00:18:28,800 Speaker 1: might want to call it, considering the fact that no 288 00:18:28,960 --> 00:18:33,800 Speaker 1: one could predict the coronavirus. However, is it safe to 289 00:18:33,960 --> 00:18:37,720 Speaker 1: say that sure, I mean, the inversion of the yield 290 00:18:37,800 --> 00:18:41,880 Speaker 1: curve did its job in predicting a recession. So yeah, 291 00:18:41,960 --> 00:18:45,600 Speaker 1: you're correct that last year. Uh, it was code bread 292 00:18:45,880 --> 00:18:48,119 Speaker 1: on the yield curve, So we had an aversion for 293 00:18:48,200 --> 00:18:53,800 Speaker 1: a full quarter. And my model um over the period 294 00:18:53,880 --> 00:18:57,360 Speaker 1: since in nineteen sixties, every time the yield curve inverted, 295 00:18:57,840 --> 00:19:00,400 Speaker 1: U of recession followed and there were no falls signals. 296 00:19:00,840 --> 00:19:04,400 Speaker 1: So it was seven out of seven and it got 297 00:19:04,520 --> 00:19:10,240 Speaker 1: the number eight signal, which suggested recession. And you're correct, 298 00:19:10,280 --> 00:19:13,280 Speaker 1: we're obviously in a recession right now. Did deal curve 299 00:19:13,359 --> 00:19:17,560 Speaker 1: predict the coronavirus? No, obviously not. I will never know 300 00:19:17,680 --> 00:19:24,280 Speaker 1: the counter factual. We do know that recession was largely expected, 301 00:19:24,320 --> 00:19:28,080 Speaker 1: at least from the Duke's CFO survey where up to 302 00:19:29,160 --> 00:19:32,520 Speaker 1: of the CFOs so a recession would start by the 303 00:19:32,600 --> 00:19:37,920 Speaker 1: first quarter of So again we won't Actually no, we 304 00:19:38,000 --> 00:19:42,359 Speaker 1: can never know the counter factual. UM. But I guess, uh, 305 00:19:43,119 --> 00:19:44,560 Speaker 1: we didn't know there was going to be an oil 306 00:19:44,600 --> 00:19:50,760 Speaker 1: embargo in nine three either. So the indicator is eight 307 00:19:50,840 --> 00:19:54,280 Speaker 1: for eight. I'm counting it as a win. Cam I'm 308 00:19:54,320 --> 00:19:57,280 Speaker 1: putting it in the wind column. Sometimes you get lucky 309 00:19:57,520 --> 00:20:02,879 Speaker 1: and sometimes unlucky. Uh, I'll take some of that, that's right. Well, 310 00:20:02,920 --> 00:20:04,240 Speaker 1: I don't know how lucky it is to have a 311 00:20:04,320 --> 00:20:07,520 Speaker 1: recession to be able to predict it. But I will 312 00:20:08,160 --> 00:20:11,679 Speaker 1: I'll count it as win now cam obviously, now as 313 00:20:11,800 --> 00:20:15,119 Speaker 1: we do start to take baby steps to to get 314 00:20:15,200 --> 00:20:18,680 Speaker 1: the economy reopened and back on track, there's a lot 315 00:20:18,800 --> 00:20:24,280 Speaker 1: of very uh you could call it uh exuberance in 316 00:20:24,359 --> 00:20:26,560 Speaker 1: the stock market, not just the gold market. You never 317 00:20:26,640 --> 00:20:32,119 Speaker 1: seen this really rip wearing rally in stocks um recently, Lee, 318 00:20:32,240 --> 00:20:34,600 Speaker 1: we have seen the long end of the curve sort 319 00:20:34,640 --> 00:20:37,480 Speaker 1: of come off the floor a little bit and rise 320 00:20:37,520 --> 00:20:39,600 Speaker 1: a little bit, a little bit of steepening in the curve, 321 00:20:40,280 --> 00:20:43,320 Speaker 1: and that has everyone sort of turning their attention to 322 00:20:43,440 --> 00:20:47,199 Speaker 1: the Federal Reserve will have the Jackson Hole Symposium at 323 00:20:47,200 --> 00:20:50,080 Speaker 1: the end of the month, And I think I feel 324 00:20:50,080 --> 00:20:54,120 Speaker 1: like the bond market has really been speculating. I guess 325 00:20:54,160 --> 00:20:58,600 Speaker 1: you can call it speculating, wishful thinking, hoping uh that 326 00:20:58,800 --> 00:21:02,359 Speaker 1: the Fed will resort to some sort of yield curve 327 00:21:02,520 --> 00:21:06,240 Speaker 1: control to keep that long end low in order to 328 00:21:06,600 --> 00:21:09,920 Speaker 1: keep barring costs slow and keep this recovery going. As 329 00:21:09,960 --> 00:21:14,440 Speaker 1: a yield curve student like yourself, does, what's your reaction 330 00:21:14,520 --> 00:21:17,480 Speaker 1: to that, to the notion that the FED could potentially 331 00:21:18,320 --> 00:21:21,879 Speaker 1: artificially bend the curve to to its wishes. Is that 332 00:21:22,240 --> 00:21:26,000 Speaker 1: is that a good thing or a bad thing. So traditionally, 333 00:21:26,640 --> 00:21:30,480 Speaker 1: the FED has had control over the short term part 334 00:21:30,640 --> 00:21:33,359 Speaker 1: of the yield curve UH, and they would engage in 335 00:21:33,440 --> 00:21:38,120 Speaker 1: open market operations and UH deal with the FED funds rate. 336 00:21:39,040 --> 00:21:44,440 Speaker 1: But we're in extraordinary times where this time around we've 337 00:21:44,520 --> 00:21:49,639 Speaker 1: got unlimited quantitative using and that means the whole curve 338 00:21:49,920 --> 00:21:55,680 Speaker 1: is being influenced by the Fed. Will this be morphing 339 00:21:55,800 --> 00:21:59,920 Speaker 1: into yield curve control? I certainly hope not. These acts 340 00:22:00,359 --> 00:22:04,879 Speaker 1: are distortive. I don't think it's a great idea to 341 00:22:05,000 --> 00:22:10,200 Speaker 1: have these really low or negative interest rates. It doesn't 342 00:22:10,240 --> 00:22:13,680 Speaker 1: make any sense that in some countries you can get 343 00:22:14,200 --> 00:22:17,640 Speaker 1: a mortgage where it's a negative rate, so you get 344 00:22:17,760 --> 00:22:21,200 Speaker 1: you get paid every month to take out a mortgage. 345 00:22:21,400 --> 00:22:26,520 Speaker 1: Does that or look at Japan? Yeah, look at Japan. 346 00:22:27,119 --> 00:22:30,040 Speaker 1: That that's a great example of gild per control. Their 347 00:22:30,080 --> 00:22:34,640 Speaker 1: bond markets gone, so Japanese government bonds are just bought 348 00:22:34,720 --> 00:22:37,399 Speaker 1: by the Bank of Japan. Is that the model that 349 00:22:37,520 --> 00:22:42,959 Speaker 1: we actually want? So it is a very unusual situation. 350 00:22:43,480 --> 00:22:49,800 Speaker 1: We're in a deep recession, yet the stock market has 351 00:22:49,920 --> 00:22:54,960 Speaker 1: completely blown it off, and you're correct, you see some 352 00:22:55,119 --> 00:23:00,240 Speaker 1: green shoots in the bond market also, So I really worry. Um, 353 00:23:00,880 --> 00:23:07,040 Speaker 1: it's I said, irrational exuperance in gold, but a minimum, 354 00:23:07,480 --> 00:23:11,360 Speaker 1: it's uh, kind of a rose colored glasses effect where 355 00:23:11,520 --> 00:23:15,679 Speaker 1: people are not looking at the structural damage that's been 356 00:23:15,760 --> 00:23:20,000 Speaker 1: done to our economy, the potential cost of the QUEI, 357 00:23:20,440 --> 00:23:23,440 Speaker 1: the potential cost of having to pay back all of 358 00:23:23,520 --> 00:23:29,200 Speaker 1: the fiscal stimulus that's been completely ignored, and to me, 359 00:23:29,359 --> 00:23:51,000 Speaker 1: that's very worrisome when you've got markets like this. Well, 360 00:23:51,040 --> 00:23:54,120 Speaker 1: we'll likely hear more about yield curve control next month 361 00:23:54,359 --> 00:23:57,600 Speaker 1: at the FED meeting. Cam looking at the yield curve 362 00:23:57,680 --> 00:24:00,239 Speaker 1: though right now, is there any signal that you can 363 00:24:00,280 --> 00:24:02,880 Speaker 1: actually take away from it? And combining that with other 364 00:24:02,960 --> 00:24:05,000 Speaker 1: signals that you look at. You mentioned the Duke CFO 365 00:24:05,119 --> 00:24:08,480 Speaker 1: survey any recent results from that as well. So the 366 00:24:08,560 --> 00:24:12,800 Speaker 1: yelk curve is positively sloped, which means that it's signaling 367 00:24:13,160 --> 00:24:17,359 Speaker 1: economic growth, and I believe that's what's going to happen. 368 00:24:17,840 --> 00:24:20,399 Speaker 1: So the recovery is not going to be V shaped, 369 00:24:21,320 --> 00:24:25,840 Speaker 1: but it will be a very strong recovery. And I 370 00:24:26,000 --> 00:24:29,159 Speaker 1: think that that's consistent of with the Yelk curve signal. Remember, 371 00:24:29,440 --> 00:24:32,080 Speaker 1: the slope of the yeel curve is telling us about 372 00:24:32,760 --> 00:24:38,000 Speaker 1: expected future growth, so it's not just signaling recessions. It's 373 00:24:38,000 --> 00:24:41,200 Speaker 1: also signaling a growth. So we will see that growth. 374 00:24:41,600 --> 00:24:47,200 Speaker 1: But I doubt given the slope that that growth is 375 00:24:47,400 --> 00:24:52,080 Speaker 1: going to be robust. Uh. And yes, it might be 376 00:24:52,560 --> 00:24:54,880 Speaker 1: that we get these really big numbers, but I think 377 00:24:55,480 --> 00:24:59,879 Speaker 1: people need to understand the following. If you started a 378 00:25:00,080 --> 00:25:05,280 Speaker 1: hundred and you dropped by if the next quarter you gain, 379 00:25:06,280 --> 00:25:10,440 Speaker 1: you're not back to hundred, You're only at s. So 380 00:25:11,119 --> 00:25:14,000 Speaker 1: so we need to carefully look at this. It'll be 381 00:25:14,080 --> 00:25:17,840 Speaker 1: a while before we actually get back to where we started. Um. 382 00:25:18,119 --> 00:25:23,280 Speaker 1: But again, markets don't seem to factor that in. So 383 00:25:24,280 --> 00:25:29,160 Speaker 1: these head evaluations in the equity market, UM, I think 384 00:25:29,560 --> 00:25:32,000 Speaker 1: a lot of people believe they're just unsustainable in the 385 00:25:32,119 --> 00:25:34,119 Speaker 1: long run. You're not in the camp of believing in 386 00:25:34,240 --> 00:25:38,399 Speaker 1: some sort of permanent higher plateau invaluations. I take it. Uh, No, 387 00:25:38,640 --> 00:25:43,160 Speaker 1: I'm not. And as you know, it's a very uh 388 00:25:44,840 --> 00:25:50,680 Speaker 1: diverse uh situation. There's a lot of dispersion. So the 389 00:25:50,800 --> 00:25:53,760 Speaker 1: behavior at the top ten stop sent SMP five hundred 390 00:25:54,040 --> 00:25:58,200 Speaker 1: much different than the other four hundred ninety. So what 391 00:25:58,400 --> 00:26:02,720 Speaker 1: we're seeing is a sur urge in growth stocks and 392 00:26:03,320 --> 00:26:08,240 Speaker 1: relative to value stocks, and that difference between the growth 393 00:26:08,440 --> 00:26:12,639 Speaker 1: and the value stocks. Uh that that basically we haven't 394 00:26:12,760 --> 00:26:16,800 Speaker 1: seen that ever before. So what's happening to growth stocks 395 00:26:17,440 --> 00:26:22,040 Speaker 1: seems to me very similar to what's happening with gold Well. 396 00:26:22,080 --> 00:26:25,359 Speaker 1: I think it's that time. It's that time, Mike stand 397 00:26:25,440 --> 00:26:29,240 Speaker 1: clear of the craziest things we saw in markets this week? 398 00:26:29,760 --> 00:26:33,160 Speaker 1: All right, Sarah, you're back from vacation. You had two 399 00:26:33,280 --> 00:26:38,080 Speaker 1: full weeks to come up with a crazy thing hit us. 400 00:26:38,160 --> 00:26:40,639 Speaker 1: What's the craziest thing you've seen? All right? So maybe 401 00:26:40,720 --> 00:26:43,720 Speaker 1: this is just a story of and it it hits 402 00:26:43,800 --> 00:26:46,800 Speaker 1: well this year. It's kind of got a bit of 403 00:26:46,960 --> 00:26:51,320 Speaker 1: humor to it, also a bit crazy. On Wednesday, um 404 00:26:51,600 --> 00:26:55,560 Speaker 1: Penn National Gaming stock took a hit, But the reason 405 00:26:55,640 --> 00:26:57,840 Speaker 1: it took a hit was after Dave Portnoy, who is 406 00:26:57,880 --> 00:27:01,560 Speaker 1: the founder of Barstool Sports, posted a video of himself 407 00:27:01,880 --> 00:27:05,879 Speaker 1: on Twitter saying that he was sick and that was 408 00:27:06,040 --> 00:27:09,800 Speaker 1: the reason why he hadn't been streaming recently. He said, 409 00:27:10,119 --> 00:27:12,960 Speaker 1: do I have COVID? He wasn't sure, but he kind 410 00:27:13,000 --> 00:27:15,760 Speaker 1: of assumed that he did. Anyway, just the idea that 411 00:27:15,880 --> 00:27:19,320 Speaker 1: one person getting sick in the year of can hit 412 00:27:19,359 --> 00:27:21,720 Speaker 1: a stock to the extent of two percent in a 413 00:27:21,840 --> 00:27:26,200 Speaker 1: day like that's that's pretty crazy. Yeah, it's crazy enough 414 00:27:26,320 --> 00:27:28,600 Speaker 1: one person, but with that particular person, the fact that 415 00:27:28,720 --> 00:27:32,280 Speaker 1: that guy can move the share price is um I 416 00:27:32,400 --> 00:27:37,159 Speaker 1: like you said, that's that's in a nutshell right there. Nutshell, 417 00:27:37,200 --> 00:27:39,880 Speaker 1: you can't escape it. Pretty good? How about you, Cam, 418 00:27:39,960 --> 00:27:42,520 Speaker 1: Have you seen anything crazy and markets this year? I 419 00:27:42,600 --> 00:27:45,639 Speaker 1: know it's been a very normal quiet year and markets. Uh, 420 00:27:46,440 --> 00:27:50,000 Speaker 1: but what's popped out at you recently? That's crazy. The 421 00:27:50,200 --> 00:27:54,840 Speaker 1: thing that's popped out that to me is very unexpected, 422 00:27:55,320 --> 00:28:01,720 Speaker 1: and that is Berkshire Hathaway being long Gold. So given 423 00:28:02,359 --> 00:28:05,920 Speaker 1: the history of Warren Buffett and how negative he's been 424 00:28:06,000 --> 00:28:10,280 Speaker 1: on Gold when it's above um or a very kind 425 00:28:10,320 --> 00:28:14,600 Speaker 1: of rich value, it's very surprising that Berkshire took this 426 00:28:14,680 --> 00:28:19,720 Speaker 1: position and indicates to me that there's at least a 427 00:28:19,840 --> 00:28:24,840 Speaker 1: minimum and disagreement within their portfolio management team. I take 428 00:28:24,880 --> 00:28:26,800 Speaker 1: it he's not a bystander in this case, or is he? 429 00:28:26,920 --> 00:28:31,600 Speaker 1: Sounds like you might be. He's become what he wants mocked. 430 00:28:31,880 --> 00:28:36,280 Speaker 1: Perhaps that is interesting, though, I I can't remember wherever 431 00:28:36,400 --> 00:28:39,240 Speaker 1: hearing Buffett long Gold, but he's been he's been sort 432 00:28:39,280 --> 00:28:43,120 Speaker 1: of barrish about the whole the whole recession and economy 433 00:28:43,160 --> 00:28:46,000 Speaker 1: this year anyway. But well, that's pretty good. Two good ones. Um, 434 00:28:46,200 --> 00:28:48,440 Speaker 1: all right, I'll give you mine, Sarah. Mine actually was 435 00:28:48,720 --> 00:28:53,760 Speaker 1: given to me courtesy of our chief Crazy Things correspondent, 436 00:28:53,920 --> 00:28:56,560 Speaker 1: Vildonna Hirich. When you go on vacation, she has no 437 00:28:56,720 --> 00:28:58,560 Speaker 1: choice but to but to cough them up to me. 438 00:28:58,760 --> 00:29:01,040 Speaker 1: She sends them to you instead it to me. It's 439 00:29:01,040 --> 00:29:03,320 Speaker 1: pretty good. No help for me this week, though, you're 440 00:29:03,360 --> 00:29:06,920 Speaker 1: on your own. This is from a website Action network 441 00:29:07,080 --> 00:29:10,400 Speaker 1: dot com. It's written by Daryn Ravelli's he's a pretty 442 00:29:10,400 --> 00:29:14,880 Speaker 1: famous sports business journalist. Uh And it reports that an 443 00:29:15,040 --> 00:29:19,960 Speaker 1: unopened case of nineteen eighties six nineteen eight seven Flair 444 00:29:20,080 --> 00:29:24,240 Speaker 1: basketball cards, not even based baseball cards, money basketball cards 445 00:29:25,080 --> 00:29:29,920 Speaker 1: recently sold at an auction for one million, seven hundred 446 00:29:30,160 --> 00:29:33,320 Speaker 1: at Andy nine thousand, seven hundred and seventeen dollars, So 447 00:29:33,760 --> 00:29:38,680 Speaker 1: almost one point eight million dollars for a big unopened 448 00:29:39,040 --> 00:29:43,520 Speaker 1: box of basketball cards. Contained inside that big box there 449 00:29:43,560 --> 00:29:46,760 Speaker 1: were twelve boxes with thirty six packs each. So I 450 00:29:46,880 --> 00:29:49,160 Speaker 1: forget how many comes in a pack, maybe twenty, so 451 00:29:49,800 --> 00:29:53,040 Speaker 1: a lot of cards. But still for nineteen eight six 452 00:29:53,160 --> 00:29:58,239 Speaker 1: eight seven basketball season, one point eight million dollars UH 453 00:29:58,520 --> 00:30:01,480 Speaker 1: for those cards. Sarah, that's not the crazy part, though. 454 00:30:01,520 --> 00:30:03,840 Speaker 1: Here's here's what I think is the craziest part. You ready, 455 00:30:04,640 --> 00:30:08,240 Speaker 1: I'm ready. I think whoever paid that it was a steal. 456 00:30:08,520 --> 00:30:11,840 Speaker 1: They got a bargain, um. And here's why. Because that 457 00:30:12,120 --> 00:30:16,920 Speaker 1: particular year, a certain basketball player from North Carolina who 458 00:30:17,000 --> 00:30:19,760 Speaker 1: did not go to Duke was a rookie in the NBA, 459 00:30:19,880 --> 00:30:26,560 Speaker 1: Michael Jordan's And based on these past openings of these boxes, UH, 460 00:30:27,040 --> 00:30:30,480 Speaker 1: there's typically about thirty six Michael Jordan's rookie cards in 461 00:30:30,600 --> 00:30:34,400 Speaker 1: this and since this documentary about Jordan's on on ESPN, 462 00:30:34,440 --> 00:30:38,480 Speaker 1: they've been selling UH in their neighborhood of eighty thousand 463 00:30:38,800 --> 00:30:43,040 Speaker 1: to ninety seven thousand dollars each per card. So this 464 00:30:43,240 --> 00:30:45,960 Speaker 1: this guy whoever, or this man or woman whoever paid 465 00:30:46,040 --> 00:30:49,360 Speaker 1: one point eight million for these cards. If they get 466 00:30:49,400 --> 00:30:52,040 Speaker 1: that many Jordan cards, theoretically they're looking at about a 467 00:30:52,120 --> 00:30:56,600 Speaker 1: three million dollar UH asset right there with those thirty 468 00:30:56,600 --> 00:30:59,400 Speaker 1: six cards. So the buyer knew what he or she 469 00:30:59,600 --> 00:31:03,040 Speaker 1: was doing. Gotta steal. Well, we'll have to leave it there, 470 00:31:03,200 --> 00:31:05,640 Speaker 1: Kim Harvey, thank you so much for joining the show today. 471 00:31:06,200 --> 00:31:18,920 Speaker 1: Great to be back on the show What Goes Up. 472 00:31:19,040 --> 00:31:22,320 Speaker 1: We'll be back next week. Until then, you can find 473 00:31:22,440 --> 00:31:25,600 Speaker 1: us on the Bloomberg Terminal website and app, or wherever 474 00:31:25,720 --> 00:31:28,200 Speaker 1: you get your podcasts. We'd love it if you took 475 00:31:28,240 --> 00:31:30,200 Speaker 1: the time to rate and review the show on Apple 476 00:31:30,240 --> 00:31:33,200 Speaker 1: Podcasts so more listeners can find us. And you can 477 00:31:33,240 --> 00:31:36,320 Speaker 1: find us on Twitter, follow me at Sara pant Sack, 478 00:31:36,760 --> 00:31:40,240 Speaker 1: Mike is that Reaganonymous? And you can also follow Bloomberg 479 00:31:40,240 --> 00:31:44,000 Speaker 1: Podcasts at Podcasts. Again. Thank you to Charlie Pellett of 480 00:31:44,000 --> 00:31:46,480 Speaker 1: Bloomberg Radio and also the voice of the New York 481 00:31:46,560 --> 00:31:50,440 Speaker 1: City Subway system. What Goes Up as produced by Jordan Gospore. 482 00:31:50,840 --> 00:31:54,360 Speaker 1: The head of Bloomberg podcast is Francesco Levie. Thanks for listening. 483 00:31:54,600 --> 00:31:55,360 Speaker 1: See you next time.