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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Terminal and the Bloomberg Business appar with our top story fedshare,
Speaker 2: Jpowell signals another delay in cards. B and wi's Alia Levine,
Speaker 2: saying this, the market is more aligned with the FED
Speaker 2: than three months ago. That move from six to three
Speaker 2: hikes happened with barely a hiccup in the equity market.
Speaker 2: We think the FED will cut less and later. It
Speaker 2: could be two. As long as the economy is strong
Speaker 2: and the labor market is resilient, the equity market can
Speaker 2: handle less and later.
Speaker 3: Alisa joins us now for more. Alisa, good to see
Speaker 3: you in the morning.
Speaker 2: Been too long. Let's talk about how you framed the EE.
Speaker 2: We're talking about a year or two halfs. I think
Speaker 2: the second half was going to be a little bit
Speaker 2: better maybe than the first half. How's that shapen up now?
Speaker 4: So it looks like the first half was very very strong,
Speaker 4: obviously coming into the first quarter up ten percent on
Speaker 4: the S and p up eleven percent including dividends. Look,
Speaker 4: we're clearly walking into a counter story here in the
Speaker 4: last few weeks. So it's not just that the rate
Speaker 4: cuts are lesson later, but it's also is inflation higher?
Speaker 4: And then the Powell yesterday age is sort of said
Speaker 4: the part that we were all thinking, which is are
Speaker 4: there no cuts at all this year? But to your
Speaker 4: conversation earlier, I think the issue is the pivot already happened.
Speaker 4: The pivot happened in December. To pivot from the pivot
Speaker 4: is going to be a very difficult thing for the institution.
Speaker 4: So we're in a place where you know, the Fed
Speaker 4: can hold this high for longer, but I don't think
Speaker 4: we go higher, right, So we're not pivoting from the pivot.
Speaker 4: And ultimately, the data really are hanging in there. I mean,
Speaker 4: the job market data has actually been extraordinary, and if
Speaker 4: you just look at a rolling three month average you know,
Speaker 4: six months ago that rolling three month average of job
Speaker 4: creation was two hundred and twenty thousand jobs per month.
Speaker 4: We're now at two hundred and seventy five thousand jobs
Speaker 4: per month.
Speaker 5: So we've ticked right back.
Speaker 4: Up in what is supposed to be a slowdown this year,
Speaker 4: and we've done it with wages quietly ticking lower. So
Speaker 4: there's a supply story going on in the labor market
Speaker 4: that I think the FED is hanging their hat on
Speaker 4: here to kind of quietly bring inflation down on the
Speaker 4: labor side, on the wage side, even as we see
Speaker 4: some higher numbers in the services.
Speaker 2: I remember you called twenty twenty one the COVID xcess years,
Speaker 2: twenty two to twenty three with the transition years, and
Speaker 2: you were setting up twenty twenty four to be the.
Speaker 3: New normal, the new normal, the new normal. Do you
Speaker 3: think we're still in the transition years or is this
Speaker 3: really the new normal?
Speaker 4: So this feels like the new normal, which is we
Speaker 4: seem to have better labor supply, We have an economy
Speaker 4: that can grow at two and a half percent, and
Speaker 4: we have inflation that's probably not going down to two
Speaker 4: percent anytime soon because we have some deglobalization, we have restoring,
Speaker 4: and of course we've got hot conflicts in two parts
Speaker 4: of the world where commodities matter, food and energy.
Speaker 5: So we're in a place of.
Speaker 4: Let's call it two and a half to three percent
Speaker 4: inflation as a steady state. That feels about right. We're
Speaker 4: also in a place where growth is likely to be
Speaker 4: higher than that two percent which we had in the
Speaker 4: post global financial crisis world. So I think this is
Speaker 4: the new normal. This seemed like it would be the
Speaker 4: new normal. We've had hiccups along the way, but this
Speaker 4: doesn't feel problematic.
Speaker 6: Right.
Speaker 4: We've lived in this world of two and a half
Speaker 4: percent growth and two and a half to three percent
Speaker 4: inflation quite well with five percent yields.
Speaker 7: It's not problematic for Google, it's not problematic for Microsoft.
Speaker 7: It's really problematic for a lot of smaller companies that
Speaker 7: they're struggling with highly leveraged balance sheets. At what point
Speaker 7: does that become a problem for the broader market, given
Speaker 7: that that's sort of the steady drum that hasn't go.
Speaker 4: Away in the backdrop, right, So that's true, there has
Speaker 4: been a bifurcation here, and this like the slow ringing
Speaker 4: out of excesses and leverage in all these challenged balance sheets.
Speaker 4: So you see it in the Russell for instance, they
Speaker 4: Russell's down three percent this year. There was a lot
Speaker 4: of hope last year with the pivot that this asset
Speaker 4: class would finally rally sell twenty five percent below the
Speaker 4: highs of.
Speaker 5: Twenty twenty one.
Speaker 4: It is happening across the economy to smaller businesses, but
Speaker 4: the larger cap companies and the larger companies in the
Speaker 4: US termed out their debt, meaning just like households which
Speaker 4: termed out their debt at three percent, mortgages fixed rates.
Speaker 4: Large companies you know, sole bonds in twenty twenty and
Speaker 4: twenty twenty one at three and four percent interest rates,
Speaker 4: and those are not due.
Speaker 5: The bulk of the S ANDP that debt is not.
Speaker 4: Due until twenty thirty or later. So you have stronger companies,
Speaker 4: larger companies actually paying out debt at three and four
Speaker 4: percent and getting five and a half percent on their cash,
Speaker 4: similar to what households are doing as well. Just keeping
Speaker 4: that part of the market really solid. So the structure
Speaker 4: of the US markets are going to protect the S
Speaker 4: and P from what we're seeing in some of those
Speaker 4: smaller companies, and yes, if the re FED keeps high
Speaker 4: for longer, then we will see that slowly wind its
Speaker 4: way through the economy. It's just really slow, and it's
Speaker 4: very unequal in how the higher rates and the contraction
Speaker 4: of credit is hitting the economy.
Speaker 7: So what I'm hearing from you is own US big
Speaker 7: tech companies and chill, is there some room for say,
Speaker 7: Tebells or you know, international or gold or do.
Speaker 5: You just basically.
Speaker 7: Say you can have your general allocation overweight US stocks
Speaker 7: just keep their particular the tech name.
Speaker 4: So we allocate to all asset classes on the On
Speaker 4: the equity side, we have favored US and large for
Speaker 4: several years now because it seems very clear that potential
Speaker 4: growth in the US is just higher than elsewhere, and
Speaker 4: even though we get better than expected numbers from Europe
Speaker 4: or even China, it's just not enough to really go
Speaker 4: where the US can go in terms of sustaining growth,
Speaker 4: looking at policies that have to, you know, boost growth there.
Speaker 4: So we've been US large cap overweight for a while now.
Speaker 4: We're very comfortable with that, but we do allocate everywhere.
Speaker 4: In terms of the bonds, we've always said you've got
Speaker 4: to you know, actively manage your bonds.
Speaker 5: We never said go long duration.
Speaker 4: We said please get out of cash because we think
Speaker 4: it's a year where cash can under perform. We think
Speaker 4: as rates move higher, it is a great time. As
Speaker 4: you said, why does everybody want to go into bonds
Speaker 4: when you know when rates come down fifty basis points like,
Speaker 4: maybe this is the time to start, you know, walking
Speaker 4: out a little bit, but you have to actively manage it.
Speaker 5: And we still like.
Speaker 4: Alternatives here for that world where there is just our
Speaker 4: distressed assets to invest in, and private equity valuations are
Speaker 4: seadily coming down, and this is the time you want
Speaker 4: to start getting into those vintages.
Speaker 5: And what about gold?
Speaker 4: So I heard your gold conversation earlier. Look, gold can
Speaker 4: be a risk off asset or a risk on asset.
Speaker 5: It is not in our allocations.
Speaker 4: It has no yield, it has no dividend, just very
Speaker 4: hard to track here. But I think he your gold
Speaker 4: is as acting as a inflation an expression of discomfort
Speaker 4: with possible inflation.
Speaker 5: Bumps.
Speaker 2: Okay, well there's a lot of discomfort. We're at all
Speaker 2: time high. So Elisha, Levina, bn y Man and Alicia,
Speaker 2: don't leave it so long.
Speaker 3: Next time. It's good to see you.
Speaker 5: I will promise to be back.
Speaker 3: Thank you very much, appreciate it.
Speaker 2: Security Advisor Jake Sullivan saying the President is coordinating with
Speaker 2: allies on quote comprehensive response, adding we anticipate that our
Speaker 2: allies and partners will soon be following with their own sanctions.
Speaker 2: Admiral James Travenis, the former NATO Supreme Allied Commander and
Speaker 2: co author of twenty fifty four, a novel, joins US now.
Speaker 2: Admiral wonderful to get your expertise on this program once more.
Speaker 2: It's fantastically catch up with you, sir. I want to
Speaker 2: start with this question, and it's what did we learn
Speaker 2: over the weekend?
Speaker 3: And by we I mean Iran.
Speaker 2: What do you think Iran learned about the missile defense
Speaker 2: system in Israel?
Speaker 8: They learned that it is formidable, that it is comprehensive geographically,
Speaker 8: and I think above all Tehran would have been surprised
Speaker 8: at the extraordinary coalition operation. You know, I've spent a
Speaker 8: lifetime in the military, a lot of it doing air defense,
Speaker 8: guided missile destroyer command, for example. The hardest thing in
Speaker 8: the world is to knit together the Israeli air defense
Speaker 8: the American Air Defense is alongside Jordan, UK, France and
Speaker 8: put them all together. I think Iran was unpleasantly surprised
Speaker 8: at the coalition level, the comprehensiveness, and most obviously John
Speaker 8: at the result ninety nine percent patting rate knocking down
Speaker 8: incoming missiles.
Speaker 2: Do you think the success of that defense admirable, shape
Speaker 2: or influence Israel's response?
Speaker 6: No, I don't.
Speaker 8: As follows, the Israelis are clearly looking at it, and
Speaker 8: I think they should as a massive attempt to bombard
Speaker 8: their homeland, something they have not done to Iran heretofore,
Speaker 8: it's been between proxies of fighting more or less. Now
Speaker 8: you've got the Iranian military, specifically Revolutionary Guards and elements
Speaker 8: of the conventional Iranian military launching a massive wave of
Speaker 8: missiles at Israel. So they will respond. I think they'll
Speaker 8: respond in a measured way, but clearly they are going
Speaker 8: to take on this challenge from Iran.
Speaker 9: Is there a way Israel could respond to make sure
Speaker 9: that there's deterrence when it comes to rom but not
Speaker 9: make sure that they're sparking off some revenge cycle in
Speaker 9: the Gulf.
Speaker 8: Yeah, this is exactly the right question. It's the one
Speaker 8: clearly under discussion in the war cabinet, and I'd think
Speaker 8: of it as an ascending ladder of violence, meaning option one,
Speaker 8: do nothing militarily but imposed sanctions, more diplomatic aggressiveness, try
Speaker 8: and get all your allies on board, perhaps some cyber response.
Speaker 8: I think option two is you go after kinetically, perhaps
Speaker 8: maritime assets, Iranian warships. You up the cyber game a bit.
Speaker 8: You certainly throughout this are going to go after the proxies.
Speaker 6: Option three is a strike.
Speaker 8: On the Iranian homeland that could be a fairly tightly packaged,
Speaker 8: perhaps going after the industrial facility where the drones are built.
Speaker 8: Option four, and let's hope the Israelis don't pick Option four,
Speaker 8: would be a massive counter attack. Hundreds of missiles, both
Speaker 8: ballistic and crews, aircraft, all of that thrown at major
Speaker 8: military targets across Iran.
Speaker 6: I don't see that latter option.
Speaker 8: I think you'll find a mix of option two and
Speaker 8: three as I just described them.
Speaker 9: One of those options had to do with the Red Sea,
Speaker 9: and this morning we have a new reporting that there's
Speaker 9: a naval mission underway with you, the Iranian Navy escorting
Speaker 9: some of their commercial vessels from the Gulf of Aiden
Speaker 9: to the sus Canal. Do you think Iran is preparing
Speaker 9: potentially for some sort of retaliation in these waters?
Speaker 6: Clearly they are.
Speaker 8: And let's recall, immediately before, perhaps a day before the
Speaker 8: strike against Israel, over the weekend, the Iranian navy, in
Speaker 8: what can only.
Speaker 6: Be described as an act of.
Speaker 8: Piracy, seized a large merchant ship that is ultimately owned
Speaker 8: by Israel by an Israeli business concern. So Iran kicked
Speaker 8: off that cycle as well. I think the Israelis have
Speaker 8: to be contemplating something in retaliation for that, hence the
Speaker 8: escort by the Iranian warship Adamiral.
Speaker 7: I've been trying to understand why are has felt so
Speaker 7: emboldened to take these new steps to directly attack Israel
Speaker 7: on its own land, to move.
Speaker 5: Out of the shadows. How much is.
Speaker 7: Iran being inboldened by its relationships with Russia and with China.
Speaker 6: Oh, you've put your finger on it. That's what's different.
Speaker 8: Over the last three four years, particularly Russia, Iran is
Speaker 8: beginning to feel very comfortable in this partnership they have developed,
Speaker 8: which at its heart is transactions for weapons, with Iran
Speaker 8: providing very significant, fairly sophisticated drones to the Russians.
Speaker 6: In their attack on Ukraine.
Speaker 8: This in turn feeds the Iranian sense of having, if
Speaker 8: you will, a larger coalition partner behind them. And then
Speaker 8: finally with China, Iran is fully engaged in the Belton
Speaker 8: Road initiative, has received billions from the Chinese and investments,
Speaker 8: more of an economic relationship there. But both of those
Speaker 8: have emboldened Iran and well given the.
Speaker 7: Fact that they have their own coalition or the appearance
Speaker 7: of one. How much do sanctions really work to They
Speaker 7: said that they've worked at all to this point.
Speaker 8: I think sanctions are always an imperfect imperfect tool. And
Speaker 8: we can go back to the global sanctions imposed on
Speaker 8: South Africa during the apartheid era.
Speaker 6: It took decades, decades.
Speaker 8: For them to really create a sense of economic disadvantage,
Speaker 8: which caused a part of why South Africa changed course.
Speaker 8: So this is any time you impose sanctions, it's going.
Speaker 6: To be take time.
Speaker 8: And here you're absolutely correct. These are pretty leaky sanctions
Speaker 8: with at least a third of the world's GDP, maybe
Speaker 8: a bit more simply not participating. Not only China and
Speaker 8: Russia here, but for example, India not participating in the
Speaker 8: sanctions against Russia that we're correctly imposed in the Ukraine War.
Speaker 6: So it will take time.
Speaker 8: It's better than nothing, but we should not believe that
Speaker 8: it will be the path to changing the course of
Speaker 8: Iranian bad behavior.
Speaker 2: Admiral, you mentioned China. Can we finish on China? You're
Speaker 2: out with another book, the follow up to twenty thirty four,
Speaker 2: again with a brilliant elliot Akiman, a good friend of
Speaker 2: his program as well, like you, Admiral. The twenty thirty
Speaker 2: four book was a novel of the next World War.
Speaker 2: And I just want to talk about the situation between
Speaker 2: China and the United States. I don't know about you, Admiral,
Speaker 2: but waking up this morning and hearing the President talk
Speaker 2: about the prospect of umping tariffs on Chinese steel and
Speaker 2: referring directly to building ships in America, what do you
Speaker 2: think we're drifting towards here?
Speaker 8: I think, unfortunately, we are drifting toward the possibility of
Speaker 8: more tension in the relationship. But I'll close my reappearance
Speaker 8: on surveillance on a mildly optimistic note. I think a
Speaker 8: good deal of what you're going to hear in that
Speaker 8: regard over the next coming months is in fact tied
Speaker 8: to the election cycle in the United States. Once we
Speaker 8: get through that, I think that there will be a
Speaker 8: possibility of the two sides finding their way to a
Speaker 8: better modus vivendi. They are clearly going to be no
Speaker 8: go zones in the relationship over everything from Taiwan to
Speaker 8: South China Sea to military competition itself. But I think
Speaker 8: the possibility of continuing to have coupled economies and not
Speaker 8: stagger into a decoupling of these two massive economies, I
Speaker 8: think I'm cautiously optimistic we can work through that.
Speaker 6: After the election, I say.
Speaker 2: We can all agree. We hope you're great novels. Remind
Speaker 2: just that novels fictions. Admill, thank you, Sir adamal jangster Fat.
Speaker 2: It's the former NASO Supreme Allied Commander Cities and Costo.
Speaker 2: She writes in this we protect three hours and announced
Speaker 2: over the next six to eighteen months. The recent gold
Speaker 2: rally has been aided by geopolitical heat and is coinciding
Speaker 2: with record equity index levels, So a steeper risk of
Speaker 2: environment should further boost prices. Cash's with us now for
Speaker 2: more acash Camoroni to you want to talk about the
Speaker 2: drivers here we can start with that. Can you help
Speaker 2: me understand because typically we'd associate a gold move with
Speaker 2: a wiki dollar and lower yields.
Speaker 3: This is happening the other way around. Why is that?
Speaker 1: That's absolutely right, John.
Speaker 10: If you look at the gold rally over the last
Speaker 10: couple of months, it's coincided with a stronger greenback as
Speaker 10: well as a real backup in nominal yields as well
Speaker 10: as treasury yields.
Speaker 1: Real interest rate adjust the treasury yields.
Speaker 10: So I think a big part of it is financial
Speaker 10: flows are finally catching up to what's been strong physical demand. Right.
Speaker 10: If you look at what's driving gold over the last
Speaker 10: couple of years, If I was sitting in the studio,
Speaker 10: FED was at the zero lower bound, they were going
Speaker 10: to increase rates to five point two five percent. No
Speaker 10: one would have thought gold would have averaged eighteen to
Speaker 10: nineteen hundred dollars an ounce, and then here at records
Speaker 10: at twenty four.
Speaker 1: Hundred an ounce.
Speaker 10: And I think driver is the official sector demand. It's
Speaker 10: been barren coin demand from retail, very strong Chinese non
Speaker 10: monetary imports, and I think that physical demand for alternative
Speaker 10: fiat for reserve diversification in the official sector case, I
Speaker 10: think that's driving this gold demand on the physical side,
Speaker 10: and financial flows are only catching up.
Speaker 2: That's interesting given the character of demand. Then do you
Speaker 2: think there is no limit to the divergence we're seeing
Speaker 2: between say treasuries.
Speaker 10: And gold at the moment, I mean, the relationship is
Speaker 10: still there, But what we wrote in that note, and
Speaker 10: what I wrote is that the duration has just shortened.
Speaker 10: So we think getting to three thousand dollars announce over
Speaker 10: the next twelve months is plausible.
Speaker 1: If the FED proceeds with.
Speaker 10: For example, insurance cuts and nominal rates can still stay high,
Speaker 10: but then real yields would rally.
Speaker 1: If you have a turn in the dollar cycle, that
Speaker 1: would just be a kicker for.
Speaker 10: Gold getting even higher as financial investment flows come back
Speaker 10: into play. Also, given equities are at all time records
Speaker 10: or war in the.
Speaker 1: Past week or two, you also have.
Speaker 10: Potentially gold serving as a macro overlay hedge. So if
Speaker 10: you do get an equity correction or unwind, if the
Speaker 10: market is mispricing US recession risk, then I definitely think
Speaker 10: gold is a good portfolio diversifier there.
Speaker 7: Recently, in the past couple of weeks, we've seen a
Speaker 7: repricing in the bond market about the idea of higher
Speaker 7: for longer and what we hear from institutional investors and
Speaker 7: even some executives is that it's a pet rock and
Speaker 7: that it doesn't give you anything, and that there's no runoff,
Speaker 7: there's no yields, and if you go into t bails
Speaker 7: you could get five percent and you actually earn something.
Speaker 7: How much are you think institutions pull back as everybody
Speaker 7: else gets in.
Speaker 10: Well, I think the inflows are coming not only just
Speaker 10: from retail, but it is coming from institution. And if
Speaker 10: you think about gold, yes, it is a non intersparing asset,
Speaker 10: so the move in rates is not a positive tail wind.
Speaker 10: But what we're seeing is it's not a negative headwind
Speaker 10: right now either, and I think it's for other reasons.
Speaker 10: For example, the central banks are buying gold not for
Speaker 10: a yielding, but because it's a bearer asset, so you
Speaker 10: don't have credit risks. It's an alternative fiat. So some
Speaker 10: of the moves that you've seen in crypto this year
Speaker 10: part of it on etf launches. Some of that over
Speaker 10: capacity is clearly shifting over to gold and silver markets.
Speaker 10: I think also from the point of view is can
Speaker 10: you monetize gold? You actually can in the options market.
Speaker 10: You can hold gold and sell and overwrite volatility on that.
Speaker 10: And in fact, a lot of private bank, ultra high
Speaker 10: net worth individuals that own physical gold, they sell options
Speaker 10: in the market and they monetize the volatility skew well.
Speaker 7: So this is actually exactly what I was going to ask,
Speaker 7: And forgive me for getting very basic, but I do
Speaker 7: wonder about central bank buying of gold. Do they just
Speaker 7: sort of store it there? Are they looking to monetize
Speaker 7: it through options? Do they have a gold carrier who
Speaker 7: they have they can call one hundred monetize my gold
Speaker 7: and they can go and deal with it. I mean,
Speaker 7: what's the functionality of gold in a central bank portfolio?
Speaker 10: Central banks are buying gold, which is physical, physical gold
Speaker 10: that's typically stored underneath the New York Federal Reserve in
Speaker 10: London volts, some might be stored onshore, and some might
Speaker 10: be stored in France Switzerland as well.
Speaker 1: It is physical demand.
Speaker 10: It's used as a reserve device afire, it's used to
Speaker 10: as part of a broader de dollarization theme, and it's
Speaker 10: dollar recycling, right, So as treasury holdings might go down incrementally,
Speaker 10: gold holdings go up, but gets what's a smaller market,
Speaker 10: fiat market or the gold market.
Speaker 1: The gold market is much smaller.
Speaker 10: So even incremental demand pull from the official sector, which
Speaker 10: is now twenty five to twenty seven percent of annual
Speaker 10: gold mine production, that is a big boost for prices
Speaker 10: in our view, and we think that's set a higher
Speaker 10: price floor. So as one thousand dollars became kind of
Speaker 10: the new price floor post financial crisis, I'm arguing that
Speaker 10: nineteen hundred even two thousand could become the new base
Speaker 10: floor for gold going forward, and that we're in a
Speaker 10: higher for longer regime, kind of resetting price expectations over
Speaker 10: a structural period.
Speaker 9: How much do you think US sanctions are driving that
Speaker 9: appeal to gold.
Speaker 10: I think US sanctions policy has been a big driver.
Speaker 10: If I look at central bank demand trends, they started
Speaker 10: increasing post financial crisis after being net sellers for four decades.
Speaker 10: Twenty fourteen, with the Russian annexation of Crimea, central bank
Speaker 10: holdings started to increase further than In twenty eighteen with
Speaker 10: the US Sino Trades SPAD they started increasing further again,
Speaker 10: and then most recently over the last three years. You've
Speaker 10: had record central bank purchases since the Russia Ukraine War.
Speaker 9: But these purchases you say, are stored in places like
Speaker 9: downtown at the New York fed or London. Is there
Speaker 9: a point where if they're owned by that central bank,
Speaker 9: the US could still maintain control of them.
Speaker 10: Some of that has been onshore more by emerging market countries.
Speaker 10: Very difficult to track, but we do expect that trend
Speaker 10: to continue from many central bank players. And keep in
Speaker 10: mind it's not just the PBOC and Russia that have
Speaker 10: been buying gold over the last decade.
Speaker 1: It's Poland, it's India.
Speaker 10: Even within developed market Asia, Japan and Singapore have been
Speaker 10: two of the largest gold buyers in the official sector
Speaker 10: sense since January twenty one.
Speaker 2: You use the phrase that I think a lot of
Speaker 2: guests still shy away from. You said, date dollarization. Why
Speaker 2: people serve fright in that phrase? What does that mean
Speaker 2: to you?
Speaker 10: I don't think everyone is afraid of that phrase, but
Speaker 10: it is a concern for US policy makers as people
Speaker 10: look for alternatives outside of the dollar. And if you
Speaker 10: look at Russian sanctions regime since twenty twenty two, you
Speaker 10: know gold is a bearer asset was the one instrument
Speaker 10: that they.
Speaker 1: Could hold, which they held onshore that really couldn't be touched.
Speaker 10: Yes, you can push Russia out of the LBMA market
Speaker 10: and give them less liquidity to the Swiss refining centers,
Speaker 10: but they still have that asset, right So, I think
Speaker 10: from that point of view, challenging the US dollar and
Speaker 10: the hegemony of the US is probably a goal of
Speaker 10: some emerging markets, and we see that as a long term,
Speaker 10: long term trend.
Speaker 7: Is there a limit to the amount of gold that
Speaker 7: central banks can hold on a relative basis to their reserves?
Speaker 10: You know, you'd have to ask central bank reserve managers.
Speaker 10: I think from that perspective right now that has the
Speaker 10: incremental gold holdings have grown. Right now, they're representing somewhere
Speaker 10: around a twenty five percent of annual gold mine production.
Speaker 10: As that number incrementally increases, that is price supportive.
Speaker 1: We think it does two things.
Speaker 10: It lifts the price floor of gold and it damps
Speaker 10: downside price volatility. And that's why I think we're in
Speaker 10: a new regime shift and dare I say it could
Speaker 10: be a multi year, multi decade.
Speaker 2: This conversation fills incomplete without introducing bitcoin, where does bitcoin
Speaker 2: fit into this? Is it a competitor to some of
Speaker 2: the forces that you're talking about that underpendent support gold.
Speaker 10: On the retail side, we see crypto as part of
Speaker 10: the alternative fiat story, particularly with retail investors. From a
Speaker 10: central bank or official sector standpoint, we don't view crypto
Speaker 10: and bitcoin at city.
Speaker 1: As digital gold.
Speaker 10: We view that as an alternative or a separate asset class.
Speaker 10: I think gold holdings increasing from sovereign wealth funds and
Speaker 10: central banks. What it does is it proves the validity
Speaker 10: of gold in the monetary system. And gold is old
Speaker 10: and traditional money, so we think crypto is a little
Speaker 10: bit newer. That's happening more on the fiat side. For retail,
Speaker 10: I think the official sector demand story is still driven
Speaker 10: by gold.
Speaker 2: It's retail catching up to the gold story. Yet am
Speaker 2: I about to say tons of gold commercialorge? You know,
Speaker 2: we'll buy your jewelry. We'll buy your jewelry. How far
Speaker 2: away is that?
Speaker 10: Well, it happens a lot on certain networks that you
Speaker 10: might not be watching late at night already. Certainly maybe
Speaker 10: not Bloomberg, but within that context, yeah, I think so
Speaker 10: you've seen the headlines about Costco selling out of gold
Speaker 10: bar and coins during specials about young millennials doing stacks
Speaker 10: of gold bars as opposed to SAT stacks on bitcoin.
Speaker 10: So sure, I think it is becoming something that retail
Speaker 10: could get more interested in. Interestingly enough, John, ETFs have
Speaker 10: still posted outflows.
Speaker 1: Interesting since four.
Speaker 10: Q twenty the all time peak, you've seen twenty tons
Speaker 10: a month of ETF outflows on average. Imagine if that
Speaker 10: just flatlines or starts to increase, that tightens up gold
Speaker 10: physical and I think that helps accelerate the move to
Speaker 10: three thousand dollars an ounce over.
Speaker 3: This was fun months. I enjoyed this. We should do
Speaker 3: it again.
Speaker 2: A reference that to low Brown financial news networks as well.
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