WEBVTT - How Long Will the Commodities Boom Last? 0:00:05.960 --> 0:00:12.440 Welcome the trillions. I'm Joel Webber and I'm Eric Valcunas. Eric. Uh, 0:00:12.680 --> 0:00:15.720 the world is in a very different place than the 0:00:15.840 --> 0:00:18.280 last time we had trillions, and we felt like we 0:00:18.320 --> 0:00:22.400 needed to bring everyone up to speed on on sort 0:00:22.440 --> 0:00:27.840 of the big macro implications of this war in Ukraine 0:00:28.400 --> 0:00:31.400 and the role of commodities and what what's happening in 0:00:31.440 --> 0:00:35.400 the commodities market, because there's a lot of turmoil and 0:00:35.400 --> 0:00:38.640 and uh, commodities are basically part of the thing that 0:00:38.680 --> 0:00:41.680 everybody's watching. Yeah, you know, we planned to do this 0:00:41.720 --> 0:00:45.400 episode really because commodities are the new shiny objects. I mean, 0:00:45.479 --> 0:00:47.680 if you look at the commodities category, which has been 0:00:47.920 --> 0:00:52.320 really bad for like a decade, it's now the hot spot. Really, 0:00:52.360 --> 0:00:54.560 it's green all over no matter what commodity you pick, 0:00:54.600 --> 0:00:56.560 pretty much. And we were going to do it because 0:00:56.760 --> 0:01:00.160 commodities are up because of inflation fears where they were 0:01:00.160 --> 0:01:04.680 Now you have geopolitics. So we've got two major catalysts 0:01:04.720 --> 0:01:10.640 here that are creating potentially a really attractive category and 0:01:10.680 --> 0:01:12.919 investors are starting to put in money. And the commodities 0:01:13.200 --> 0:01:16.440 e t f s have grown by about fift over 0:01:16.480 --> 0:01:19.880 the past fourteen months. In organic growth. So there's a 0:01:19.959 --> 0:01:24.480 lot of trapdoors, a lot of um rated our products 0:01:24.520 --> 0:01:26.920 in here places. To you know that you don't know 0:01:26.959 --> 0:01:29.280 what you're doing, it can be tricky. So we really 0:01:29.280 --> 0:01:32.160 need to be careful when we go over a category 0:01:32.240 --> 0:01:34.600 like this. So to help us make sense of everything, 0:01:35.000 --> 0:01:39.000 Mike mccloan commodity strategist with Bloomberg Intelligence, is gonna help 0:01:39.040 --> 0:01:44.600 us understand the field, this time on trying in the 0:01:44.600 --> 0:01:49.240 boom in commodities. Last, Mike, welcome to trillions. Thanks for 0:01:49.320 --> 0:01:54.720 having so. Mike, before you were at Bloomberg, you actually 0:01:54.800 --> 0:01:56.240 were in the E T F world, So let's just 0:01:56.240 --> 0:01:58.880 start there. What what would you do before you're a 0:01:58.920 --> 0:02:01.480 commodity strategist? But I did, I like to say it 0:02:01.480 --> 0:02:03.280 just took me thirty years to get to Bloomberg. But 0:02:03.440 --> 0:02:07.080 Eric and I met on a panel. I was the 0:02:07.160 --> 0:02:09.040 head of research at et S Courtage, which is not 0:02:09.080 --> 0:02:12.959 Wisdom Train, and I remember discussing precious medals and stuff 0:02:12.960 --> 0:02:15.840 like that, and um so we've been it's been how long? 0:02:15.840 --> 0:02:18.120 Has that there? About eight nine years now? It was 0:02:18.440 --> 0:02:21.560 probably about ten years ago. Can I just explain what 0:02:21.720 --> 0:02:23.919 Mike did on this panel? I think we were in Austin, 0:02:23.960 --> 0:02:27.600 Texas at or Dallas in this like cool art bar. 0:02:27.720 --> 0:02:30.920 We were using these unique venues to do presentations on 0:02:31.000 --> 0:02:35.560 e t s and panel discussions. Anyway, Mike actually brought 0:02:35.639 --> 0:02:38.880 like physical gold coins or silver coins and he held 0:02:38.919 --> 0:02:41.160 them up and I was like, I told him after 0:02:41.240 --> 0:02:43.560 him like props. I like that. That's good. I gotta 0:02:43.600 --> 0:02:45.600 I gotta use some props in my thing too, because 0:02:45.639 --> 0:02:48.600 these panels can be so boring, So anything that you 0:02:48.639 --> 0:02:51.240 can do to spice them up, I like as a presenter, 0:02:51.280 --> 0:02:53.720 and I was. That's how I first met Mike. And 0:02:53.720 --> 0:02:55.840 then that night or later that day, I saw him 0:02:55.840 --> 0:02:58.000 in the line at the airport waiting for bags, and 0:02:58.000 --> 0:03:00.799 that's how we started talking, and um we met. That's 0:03:00.840 --> 0:03:02.880 how we became friends. And man, I remember I had 0:03:02.880 --> 0:03:05.359 a silver one of those silver dollars. If I had 0:03:05.400 --> 0:03:08.600 just given you the equivalent, had the equivalent mont of bitcoin, 0:03:08.760 --> 0:03:10.320 it would have been much better off. So so much 0:03:10.320 --> 0:03:12.400 for the physical like mindys anymore. I guess they're coming 0:03:12.400 --> 0:03:15.560 back a little. Also worth mentioning that you you cover 0:03:16.000 --> 0:03:19.200 cryptocurrencies for bluemrinkin Intelligence, which I'm sure we'll talk about. 0:03:19.520 --> 0:03:22.080 But Mike, Mike has gone full crypto. You know, we 0:03:22.120 --> 0:03:27.120 talk half crypto, Mike's I think he's probably so, Mike, 0:03:27.560 --> 0:03:30.960 let's start in a non crypto space. Let's talk about Ukraine. 0:03:31.200 --> 0:03:35.640 UM commodities has been just on this terror there's you know, 0:03:36.480 --> 0:03:40.640 the word supercycle was dropped many times last year. So 0:03:40.800 --> 0:03:43.360 where where are we at in that supercycle? And sort 0:03:43.360 --> 0:03:45.840 of bring us up to speed on on inflation and 0:03:46.200 --> 0:03:48.520 what you're seeing in Ukraine. Well, I think the most 0:03:48.640 --> 0:03:52.720 important thing for investors to realize here is allocating or 0:03:52.840 --> 0:03:56.520 some partial allocations to commodities has worked really well as 0:03:56.560 --> 0:03:59.640 a diversifier. And that's been the investors who did that 0:04:00.120 --> 0:04:02.960 early on UM reaping the benefits at least having that 0:04:03.040 --> 0:04:05.960 hedge says, you know, the boomer commodity in decks up 0:04:05.960 --> 0:04:10.360 almost on the year, crew up on as of the 0:04:10.400 --> 0:04:13.760 beginning of March, and stock market down, you NASTAC down. 0:04:14.760 --> 0:04:17.280 They're doing what they're supposed to do. UM. But the 0:04:17.360 --> 0:04:19.320 key thing that's happened is the market's price for a 0:04:19.360 --> 0:04:22.919 significant amount of demand about a supply shock out of 0:04:22.960 --> 0:04:25.680 the Russia invasion of Ukraine. And I still think it's 0:04:25.680 --> 0:04:27.320 going to be the opposite. I think it's gonna be 0:04:27.320 --> 0:04:30.279 more of a demand destruction event like happen in two 0:04:30.279 --> 0:04:32.560 thousand and eight. I'll bring those parallels in there. But 0:04:32.680 --> 0:04:34.960 one thing we need to point out is this will 0:04:35.040 --> 0:04:39.640 be a absolute boom for North American commodity producers. Now 0:04:39.640 --> 0:04:41.360 we can get in that later and a lot of 0:04:41.360 --> 0:04:43.520 our our audience will be interested in some of those 0:04:43.560 --> 0:04:47.360 producers because right now Crudels is the first time w 0:04:47.480 --> 0:04:49.440 h I really sustained above a hundred dollars of bail. 0:04:49.520 --> 0:04:51.280 The first time I did that was in two thousand eight, 0:04:51.760 --> 0:04:53.560 right about this time of year. Will dig into that. 0:04:53.600 --> 0:04:56.839 The parallels are uncanny, very scary, but we're basically almost 0:04:56.880 --> 0:05:01.560 triple the cost of US production shale, where if producers 0:05:01.560 --> 0:05:03.400 can head you out two to three years based on 0:05:03.400 --> 0:05:05.600 the curve, and you can roll down that curve when 0:05:05.600 --> 0:05:08.200 you're investing in those commodities and they can double their 0:05:08.240 --> 0:05:11.279 cost of production in terms of a price in the screen. 0:05:11.279 --> 0:05:13.560 It's happening in all the grains and everything. So this 0:05:13.600 --> 0:05:16.200 is an absolute boom for those producers. It's the question 0:05:16.200 --> 0:05:21.000 is sustainability. My fears this war will trigger a global 0:05:21.040 --> 0:05:24.080 recession which was overdue, and the whole thing will tumble 0:05:24.080 --> 0:05:27.240 down like two eight. Well, okay, let's that's a lot 0:05:27.279 --> 0:05:29.839 of like in the no macro talk rate. Let's just 0:05:29.839 --> 0:05:33.559 take a big step back and talk oil. Okay. Xcel 0:05:33.600 --> 0:05:35.520 e is a is a popular ETF people use. I 0:05:35.560 --> 0:05:39.560 believe Lestimer looked AT's in the past year. This wasn't 0:05:39.560 --> 0:05:42.719 supposed to happen. I remember some people were like, oil 0:05:42.839 --> 0:05:46.240 is over, this is a green revolution, this will never happen. 0:05:46.680 --> 0:05:50.280 Just explain to us why oil in particular is up 0:05:50.320 --> 0:05:53.560 so much in the past twelve months. If we're supposed 0:05:53.600 --> 0:05:56.800 to be like over oil, well, the first of all, 0:05:56.800 --> 0:05:59.480 the bottom line, the foundation for oil going up to 0:05:59.600 --> 0:06:01.760 Hunter down the barrel was it went down the negative 0:06:01.800 --> 0:06:06.160 forty back in April. That shut off a lot of production, 0:06:06.520 --> 0:06:09.240 and from that we came out with this almost unprecedent 0:06:09.320 --> 0:06:13.000 discipline from OPEC. Now we're returning to a demand environment 0:06:13.000 --> 0:06:16.200 and the supply is not they're OPEC discipline. But if 0:06:16.200 --> 0:06:18.080 the lessons of oil is a good example, the higher 0:06:18.120 --> 0:06:20.800 price cure should kick in and we should go back 0:06:20.839 --> 0:06:22.960 to where we were before. So it's point out right 0:06:23.000 --> 0:06:26.840 now the price of oil is about fifty below the peak, 0:06:26.960 --> 0:06:30.080 maybe below the peak in two thousand and eight. There's 0:06:30.080 --> 0:06:32.680 a reason for that because the US back in two 0:06:32.720 --> 0:06:35.520 thousand eight was a net importer, one of the largest 0:06:35.560 --> 0:06:37.320 in the world, and we had a financial we had 0:06:37.320 --> 0:06:40.280 a real estate crisis. Now the world's largest import is 0:06:40.360 --> 0:06:42.560 China and they're having a real estate crisis. But the 0:06:42.640 --> 0:06:45.120 key thing about oil was it's on the back of 0:06:45.160 --> 0:06:50.440 that major demand shock. Now we're getting supply to kick in, 0:06:51.040 --> 0:06:52.880 and the rule in commandities I'll leave you with this 0:06:52.960 --> 0:06:55.000 is a higher price cure should kick in right now. 0:06:55.040 --> 0:06:56.920 We have the war and there's fears of how that 0:06:56.960 --> 0:06:59.960 will happen, and we'll have a cut off of rush 0:07:00.040 --> 0:07:03.120 and supply, but Russia's supply is probably gonna goes directly 0:07:03.200 --> 0:07:06.840 to China and then I don't think there'll be a 0:07:06.839 --> 0:07:09.080 major disruption supply in the planet. But key thing to 0:07:09.160 --> 0:07:12.040 think about what's happening right now is this is a 0:07:12.080 --> 0:07:16.480 major shock to inflations, major shock to the FED for consumers, 0:07:16.840 --> 0:07:19.080 and it's basically repeated what it did in two thousand eight. 0:07:19.120 --> 0:07:21.520 So I'm worried that this is going to revert lower. 0:07:21.640 --> 0:07:23.520 And that's what Karel has been doing since the peak 0:07:23.560 --> 0:07:26.080 in two thousand eight. I'll end with this three times 0:07:26.120 --> 0:07:29.120 since two thousand has dropped, So that's what investors have 0:07:29.200 --> 0:07:31.280 to be worried about, and that would be more of 0:07:31.320 --> 0:07:34.440 a lower tide for everything. Okay, you mentioned the North 0:07:34.480 --> 0:07:38.600 American producers, which is an interesting component here because OPEC 0:07:38.680 --> 0:07:41.080 seems like it's gonna probably just do its own thing, 0:07:41.400 --> 0:07:44.200 maintain status quo. But what could happen over here in 0:07:44.200 --> 0:07:47.440 North America now that there's this that that opportunity, that 0:07:47.520 --> 0:07:49.800 margin that you know, if you're a shale producer, you're 0:07:49.800 --> 0:07:52.160 looking at hundred dollar oil that you could spool up 0:07:52.240 --> 0:07:55.960 real quick and start pumping again. I mentioned I focus 0:07:56.040 --> 0:07:59.600 on North America, Joel, because that North America's supply has 0:07:59.640 --> 0:08:03.360 been major paradigm pressure shift in crude oil since the 0:08:03.440 --> 0:08:06.080 peak in two thousand and eight. Back then, North America 0:08:06.120 --> 0:08:08.280 was in that import of about ten million barrels of 0:08:08.280 --> 0:08:11.120 liquid fuels a day as of this year, Department of 0:08:11.200 --> 0:08:13.760 Energy Estiment, So we'll probably be North America will probably 0:08:13.760 --> 0:08:19.000 have a surplus about four of production of liquid fuels 0:08:19.040 --> 0:08:21.600 versus consumption. Now I say liquid fuels because I'm from 0:08:21.600 --> 0:08:24.280 a farm background. In this country, towel percent of our 0:08:24.360 --> 0:08:27.400 unletted gas comes from ethanol, and that bio fuel kick 0:08:27.400 --> 0:08:29.960 self is kicking in so UM and I have to 0:08:29.960 --> 0:08:33.040 include Canada UM. But that's that's spend the paradise m 0:08:33.120 --> 0:08:36.320 this pressured oil. That's what's changed from just a decade ago. 0:08:36.760 --> 0:08:39.240 And what does that mean for the future. That supply 0:08:39.440 --> 0:08:42.000 is not gone forever, it's just coming back, it's revisiting, 0:08:42.040 --> 0:08:45.679 it's resetting. The key thing is that peak has been 0:08:45.760 --> 0:08:48.200 in consumption. I just remember being in the business line 0:08:48.240 --> 0:08:50.839 met eric All. It was all about the peak crude 0:08:50.840 --> 0:08:53.800 oil supply and it turned out to be Creek Keep 0:08:53.880 --> 0:08:58.080 peak consumption in North America. So US total liquid fuel 0:08:58.080 --> 0:09:00.480 consumption the US peaked around twenty four in barrels in 0:09:00.520 --> 0:09:02.640 two thousand eighteen. Maybe we get to twenty three million 0:09:02.679 --> 0:09:05.559 barrels a day. But the major, the most significant returning 0:09:05.640 --> 0:09:09.160 ever in the history of automotive manufacturers, is towards EVS. 0:09:09.200 --> 0:09:11.840 I own an e V and that's has probably peaked 0:09:11.880 --> 0:09:14.200 forever and it's gonna head lower. And also versus GDP, 0:09:14.360 --> 0:09:17.360 it's not it's insignificant. Now. The demand side is on China. 0:09:17.600 --> 0:09:21.240 But what's China facing major property crisis like you US 0:09:21.360 --> 0:09:24.280 had had. Now if the world has some recession, all 0:09:24.320 --> 0:09:26.560 that demand pulled for China, and of course it's gonna 0:09:26.559 --> 0:09:29.600 be a problem. Of course, this effect of China of 0:09:29.640 --> 0:09:32.600 the automobile sales last year where vs. First time? Ever, 0:09:32.640 --> 0:09:36.199 where's that going well? I I would add that to 0:09:36.400 --> 0:09:39.400 make evs you need fossil fuels. I mean, there's a 0:09:39.400 --> 0:09:42.439 lot of fossil fuel behind the scenes of clean energy. 0:09:42.480 --> 0:09:44.920 But let's move to oil. You mentioned something in your 0:09:44.920 --> 0:09:48.280 first answer, which was the curve, And just to deconstruct this, 0:09:49.280 --> 0:09:52.400 I have two categories of commodity ets. Those that are 0:09:52.440 --> 0:09:55.960 physically backed like gold, where it really does track the 0:09:55.960 --> 0:09:59.400 price very well, but then ones that you can't store, 0:09:59.800 --> 0:10:04.720 like oil, natural gas, corn. They are different than the 0:10:04.760 --> 0:10:08.000 price because they own futures and they have to constantly 0:10:08.440 --> 0:10:10.360 roll them from one month to the next as the 0:10:10.400 --> 0:10:12.840 one becomes closer to expiry because no one wants to 0:10:12.840 --> 0:10:15.520 get oil delivered to their house. So can you explain 0:10:15.559 --> 0:10:18.640 to me, if we have USO or an oil et 0:10:18.760 --> 0:10:22.280 F like that, what the annual roll costs look like 0:10:22.400 --> 0:10:24.560 right now versus what it looked like before, And what 0:10:24.600 --> 0:10:27.440 should investors be looking for when it comes to those 0:10:27.559 --> 0:10:31.400 roll costs or is it just worth it? So the 0:10:31.480 --> 0:10:34.880 key thing there, Eric is it's it's probably questions does 0:10:34.880 --> 0:10:39.120 it get much better for commodity and energy investors right now? 0:10:39.120 --> 0:10:41.840 Because of backwardation. What backwardation means you have to roll 0:10:41.920 --> 0:10:45.440 that future and every time you roll it periodically roll 0:10:45.520 --> 0:10:47.840 to a higher to a lower price. The front end 0:10:47.840 --> 0:10:50.480 this bid. The back isn't Why is the front end bid? 0:10:50.480 --> 0:10:53.240 Because typically what happens in you but a short term 0:10:53.600 --> 0:10:58.440 issue with the UM excess demand and lack of slacks supply, 0:10:58.520 --> 0:11:00.640 and then it's always expected to where can say it 0:11:00.679 --> 0:11:03.400 does that it's a higher price cure. The question is 0:11:03.440 --> 0:11:05.160 how much better is it yet? So right now crewe 0:11:05.440 --> 0:11:09.360 went in backgardation on a one year basis. I always 0:11:09.400 --> 0:11:12.240 look at the annual most of the futures positions roll 0:11:12.880 --> 0:11:15.520 each contract. That depends on how they work. But you 0:11:15.640 --> 0:11:17.200 meant there's that's the key thing I want to point. 0:11:17.240 --> 0:11:20.079 You mentioned natural gas. You've got to point a natural gas. 0:11:20.080 --> 0:11:23.080 It's the world's worst commodity investment history and mankind probably 0:11:23.120 --> 0:11:25.440 because if you look at the price right now, it's 0:11:25.840 --> 0:11:27.959 four to five dollars at the same price as twenty 0:11:28.040 --> 0:11:31.280 years ago, yet's the most expensive to store and always 0:11:31.320 --> 0:11:34.280 cost a fortune. UM and it's the key thing to 0:11:34.320 --> 0:11:38.120 remember about investing commodities. When you invest in commodities, sometimes 0:11:38.160 --> 0:11:40.320 it's better to be more tactical. And if you're thinking 0:11:40.360 --> 0:11:43.400 longer term, bye, hold stick with the metals gold. You 0:11:43.440 --> 0:11:45.559 mentioned precious metals because it will hold the physical you 0:11:45.559 --> 0:11:47.040 don't have the role as much. But the way I 0:11:47.040 --> 0:11:50.199 look at nowadays, you cannot be invested in any commands 0:11:50.280 --> 0:11:53.120 most noted goal without having some Bitcoin in that space 0:11:53.120 --> 0:11:56.160 because it's the fact that bitcoin is taking flows from 0:11:56.160 --> 0:11:59.199 gold and investment portfolio. So looking forward to what it's 0:11:59.280 --> 0:12:02.360 what's the actual roll yields? It really is dependent hipally. 0:12:02.480 --> 0:12:06.719 It costs on average five to seven percent annualized to 0:12:06.800 --> 0:12:10.480 hold crude oil in a normal contango environment. Right now 0:12:10.520 --> 0:12:15.160 you're probably making that in positive um positive returns in 0:12:15.200 --> 0:12:24.160 addition to this spot price. That's just the role. Okay, 0:12:24.200 --> 0:12:26.240 So we just went over oil, a little bit of 0:12:26.320 --> 0:12:29.920 natural gas. I would put all of those as big 0:12:30.000 --> 0:12:32.640 chunks of what's called broad commodity E T F S 0:12:33.520 --> 0:12:35.440 H and the biggest one on the market right now 0:12:35.480 --> 0:12:37.800 that's taking in the most flows and it's up this year, 0:12:37.800 --> 0:12:39.320 which is one of the best performers of the year's 0:12:39.360 --> 0:12:43.199 p DBC So this is going to hold a whole 0:12:43.240 --> 0:12:48.200 bunch of future commodity futures. You talked about tactical and 0:12:48.200 --> 0:12:49.920 I know that's what you do. You write for people 0:12:49.960 --> 0:12:52.560 who are trading, But what about a long term investor. 0:12:52.679 --> 0:12:55.280 Is this the kind of fund that is better to 0:12:55.360 --> 0:12:58.440 hold long term or should you never hold anything that 0:12:58.480 --> 0:13:01.719 holds commodity futures long term? Well, the lessons of commodities 0:13:01.800 --> 0:13:04.880 is more the latter. Unfortunately, just look at performance p 0:13:05.080 --> 0:13:08.920 dbc um from two thousand fifteen is you know, it 0:13:09.000 --> 0:13:11.439 is around twenty four or so right now it's sixteen. 0:13:11.760 --> 0:13:13.920 The problem is because there's a negative role in commodity. 0:13:14.080 --> 0:13:16.040 It's not like equities. You can buy and put them 0:13:16.040 --> 0:13:19.120 away and they're donny. You're you're in coupons, you use 0:13:19.160 --> 0:13:21.679 that buybacks. You have to worry about in this type 0:13:21.679 --> 0:13:24.319 of product. There's always have to rule that futures and 0:13:24.720 --> 0:13:28.080 the rule commodities is normal contangle. You're always in the 0:13:28.120 --> 0:13:30.400 long term half gonna have to pay some form of 0:13:30.760 --> 0:13:34.120 cost of storage. Natural gas is the most expensive. His 0:13:34.120 --> 0:13:38.280 historic commodity goal is the cheapest the store, and bitcoin 0:13:38.400 --> 0:13:41.040 is actually the cheapest now, So that's why I wrote 0:13:41.080 --> 0:13:43.000 that in there, So that's gonna come out through the 0:13:43.000 --> 0:13:45.719 future's role. Now there's periods when you have like now, 0:13:45.880 --> 0:13:48.599 you get some great performance um, and it's just a 0:13:48.679 --> 0:13:51.720 question of how long that lasts. But the bottom line 0:13:51.800 --> 0:13:54.240 is always remember is the cure for higher prices and 0:13:54.240 --> 0:13:56.319 commodities is higher prices. So why is the price of 0:13:56.400 --> 0:13:58.920 crudal right now? The same price is two thousand and 0:13:58.960 --> 0:14:02.040 eight wheat the same prices, two thousand and eight corn, 0:14:02.120 --> 0:14:05.720 the same price, and then let's looking even even um copper, 0:14:05.800 --> 0:14:08.200 it's the same price as two thousand and eleven. That's 0:14:08.240 --> 0:14:10.360 a problem. It has been a problem. You mentioned the 0:14:10.400 --> 0:14:13.240 performance the last ten years, but looking forward, when prices 0:14:13.280 --> 0:14:15.599 go up, I mentioned there's so much profits in the 0:14:15.640 --> 0:14:18.360 space that supply will come back. That's the difference withholding 0:14:18.360 --> 0:14:22.040 equities or commodity based equities, which I've understand a lot 0:14:22.040 --> 0:14:24.440 of institution investors like to focus on if they want 0:14:24.440 --> 0:14:27.400 the commodity exposure, because you don't have that always working 0:14:27.440 --> 0:14:29.960 against that contangle work in the long term working against you. 0:14:30.520 --> 0:14:33.600 So you you mentioned some specific areas there, the wet, 0:14:33.720 --> 0:14:38.880 the copper, corn, What other et F do you watch 0:14:39.160 --> 0:14:42.720 and and from you know, from a an investors standpoint, 0:14:43.160 --> 0:14:45.760 if we're back to a certain level and we have 0:14:45.800 --> 0:14:49.120 a potential for for this to be an area where 0:14:49.160 --> 0:14:52.800 we could see increased flows. Which which ETFs are you watching? Uh? 0:14:53.280 --> 0:14:55.760 Usually watched the man. I don't watch commodity t F 0:14:55.920 --> 0:14:58.720 particularly much anymore. Having been done, been there, done that. 0:14:58.760 --> 0:15:01.520 I managed many of um an SMP because I know 0:15:01.560 --> 0:15:04.040 what happens with those over time. They're melting ice cubes. 0:15:04.080 --> 0:15:06.360 It's just the fact that comminded except from the metal. 0:15:06.360 --> 0:15:08.600 It's the key ones. I watched our g l D 0:15:08.640 --> 0:15:11.400 and GBTC, and Eric knows which that is, because I 0:15:11.440 --> 0:15:14.640 think what's going to happen is GBTC will convert to 0:15:14.760 --> 0:15:17.920 a ETS. It's gonna whip take out that discount, and 0:15:17.920 --> 0:15:19.480 it probably end up being one of the best ways 0:15:19.520 --> 0:15:22.320 to get exposure the bitcoin, which is becoming the global 0:15:22.360 --> 0:15:26.360 digital reserve asset and going the world going that way. Okay, Mike, woa, Okay, 0:15:26.400 --> 0:15:29.040 So you just went over a lot quickly. I just 0:15:29.080 --> 0:15:31.440 want to can we just put bitcoin aside for a minute. 0:15:31.480 --> 0:15:34.040 We're gonna we'll get there when we When we look 0:15:34.080 --> 0:15:38.120 at at gold in particular, just it seems as though 0:15:38.840 --> 0:15:41.520 I guess we can bring bitcoin rebeck in g BTC 0:15:41.800 --> 0:15:44.640 is a is a trust which doesn't have new share creations, 0:15:44.640 --> 0:15:47.040 so it's trading in a discount. That's a that's a 0:15:47.080 --> 0:15:49.400 really unique trade that people are looking at. Let's let's 0:15:49.400 --> 0:15:54.040 put that aside. Let's look at golden bitcoin. It seems 0:15:54.080 --> 0:15:57.680 as though gold is a better store of value right now. 0:15:57.960 --> 0:16:00.400 It doesn't move around as much bitcoin. It seems to 0:16:00.400 --> 0:16:03.480 be trading like a high beta tech stock. So what 0:16:03.840 --> 0:16:06.400 isn't the bid on gold right now make make more 0:16:06.480 --> 0:16:10.360 sense if you're worried about inflation and the world, you know, 0:16:10.440 --> 0:16:14.080 having geopolitical situations. It just seems like gold is actually 0:16:14.080 --> 0:16:19.680 showing why. It's more uh true zero correl correlation. It's 0:16:19.720 --> 0:16:24.600 a more better diversifier slash hedge, whereas bitcoin is really 0:16:24.640 --> 0:16:27.360 more like a shiny object. I have to push back 0:16:27.360 --> 0:16:29.200 on that a little bit. Gold has been a horrible 0:16:29.200 --> 0:16:32.160 performer last couple of years, despite the highest inflation in 0:16:32.200 --> 0:16:34.680 forty years, and bitcoin has done very well. Serium has 0:16:34.720 --> 0:16:36.400 done a lot better. So I look at it this way. 0:16:36.440 --> 0:16:39.120 I can't speak about gold anymore without bitcoin in the 0:16:39.120 --> 0:16:42.440 same bucket. Because the world is going digital and bitcoins 0:16:42.480 --> 0:16:44.760 the digital reserve asset, and I see it and sense 0:16:44.840 --> 0:16:47.880 it every day that the old guard that held and 0:16:47.960 --> 0:16:49.920 allocated the gold, I'll know they have to have some 0:16:49.920 --> 0:16:52.200 Bitcoin in that bucket. The key thing about goal is 0:16:52.240 --> 0:16:53.960 I fully expect it's going to perform a lot better 0:16:54.000 --> 0:16:57.320 in a deflation environment UM, and it has. And that 0:16:57.480 --> 0:16:59.200 is a good indication for that would be when the 0:16:59.200 --> 0:17:02.880 long bond yields starts dropping, which I expect UM long 0:17:02.920 --> 0:17:05.000 bond yield right now it's peaked last year two point 0:17:05.040 --> 0:17:07.400 five percent and now it's like two point one. That's 0:17:07.400 --> 0:17:11.200 a recessionary trade. And gold had some major competition competition 0:17:11.240 --> 0:17:12.800 for a stock market last three years in a row 0:17:12.800 --> 0:17:16.320 of stock markets up SMP five average. Who needs goal 0:17:16.359 --> 0:17:18.920 in that environment? That to me is what should be changing. 0:17:19.040 --> 0:17:21.560 But the key thing fact is Eric and that's why 0:17:21.560 --> 0:17:24.680 what I mentioned earlier E T S. I watch gotta 0:17:24.720 --> 0:17:29.760 watch something that tracks bitcoin um because those two belong together. 0:17:29.960 --> 0:17:32.560 And I say gold is naked without bitcoin in the 0:17:32.600 --> 0:17:34.600 same bucket. That's just the facts of where things are 0:17:34.680 --> 0:17:36.480 going and have been going in the last few years. 0:17:37.200 --> 0:17:41.119 So now that Ukraine and this war is underway, a 0:17:41.160 --> 0:17:43.440 lot of interest in what bitcoin will do what's your tick. 0:17:44.680 --> 0:17:47.960 I think it's showing divergent strength versus stock market. Certainly 0:17:48.080 --> 0:17:51.120 is Bitcoin is down a few percent, but it has 0:17:51.280 --> 0:17:54.520 it basically trades that three to four x volatily, meaning 0:17:54.720 --> 0:17:57.320 the risk two D sixty day valta is that much higher. 0:17:57.320 --> 0:18:00.000 So Bitcoin at this stage versus the stock market should 0:18:00.040 --> 0:18:01.560 be done a lot more. So. What I think has 0:18:01.640 --> 0:18:05.440 happened is Bitcoin is transition from a risk on asset 0:18:05.480 --> 0:18:08.960 to a risk off asset. And what's happened in this 0:18:09.080 --> 0:18:12.480 war might have just set that tone, kicked the inflection 0:18:12.520 --> 0:18:15.480 point and bend the trigger point. People in Ukraine and 0:18:15.560 --> 0:18:17.679 Russia who can't get a penny from a t m 0:18:17.720 --> 0:18:21.720 s have have access to crypto dollars via their phones 0:18:22.320 --> 0:18:25.000 and cryptocurrencies and bitcoin is the biggest one. So to me, 0:18:25.200 --> 0:18:28.440 this is the transition. And the key fact is ask 0:18:28.480 --> 0:18:30.880 a millennial about gold. What do they say, Yeah, sorry, 0:18:30.960 --> 0:18:33.560 I'm going from bitcoin. The world is going that way, 0:18:33.960 --> 0:18:35.639 and I look at it, it it is why take the 0:18:35.720 --> 0:18:37.520 risk of not being allocated to one of the best 0:18:37.520 --> 0:18:39.600 performing assets in the world. In the world is going digital, 0:18:40.119 --> 0:18:42.399 And like I said, I'm bullish gold. I think at 0:18:42.440 --> 0:18:44.480 some point what's gonna happen is golds is gonna pop 0:18:44.480 --> 0:18:47.040 above two thousand dollars and ounce and stay there. But 0:18:47.080 --> 0:18:49.520 I fully expect bitcoint about performing. The key thing is 0:18:49.720 --> 0:18:52.119 how will we perform if when we get the next 0:18:52.240 --> 0:18:55.760 down leg in the stock market, which I expect bitcoin 0:18:55.840 --> 0:18:59.520 is still risk. Gasket will probably gravitate lower. But it's 0:18:59.520 --> 0:19:01.719 been only very good support around thirty and I think 0:19:01.760 --> 0:19:03.360 I'll end with this. I think it's just a matter 0:19:03.359 --> 0:19:07.640 of time that this global digital collateral goes to under grant. 0:19:07.640 --> 0:19:09.200 It's just a matter of time that's just based on 0:19:09.240 --> 0:19:12.680 supplied demand and increasing adoption. Let me ask you this question, 0:19:12.680 --> 0:19:14.640 which is something that I've been seeing debated on Twitter 0:19:14.680 --> 0:19:16.080 over the past couple of days, and it's a really 0:19:16.119 --> 0:19:18.520 good one, which is this idea of crypto trying to 0:19:18.560 --> 0:19:22.040 have it both ways like and this question really strikes 0:19:22.040 --> 0:19:26.880 at the core of that. Should crypto exchanges comply and 0:19:26.920 --> 0:19:29.440 do what the US government wanted to do in terms 0:19:29.440 --> 0:19:36.240 of freezing Russian accounts or should it say, no, Biden administration, 0:19:36.760 --> 0:19:39.840 that's not what we are. We are defy And that's 0:19:39.840 --> 0:19:42.840 the whole point is that we're not run by the governments. 0:19:42.880 --> 0:19:45.840 What should they do? And this is this is this 0:19:45.920 --> 0:19:49.239 is a war, and in war, the government can make 0:19:49.320 --> 0:19:51.360 them do it, and they should be smart enough to say, Okay, 0:19:51.400 --> 0:19:53.439 we're gonna do help the cause here because we have 0:19:54.160 --> 0:19:58.800 a very oppressive dictator um taking over and and taking 0:19:58.840 --> 0:20:01.600 over a free country. That's got to stop right away 0:20:01.640 --> 0:20:05.720 or it won't stop. And so any other financial institution 0:20:05.760 --> 0:20:08.480 has to do. Why shouldn't crypto exchanges to be different? Also, 0:20:08.600 --> 0:20:11.000 licensed will be revoked. That's just the fact of war. 0:20:11.400 --> 0:20:13.240 Get used to it, and get used to pay taxes 0:20:13.280 --> 0:20:16.320 when you make money. It's just that's life. The thing is, 0:20:16.600 --> 0:20:20.600 this is a revolution in digital assets. Now anybody in 0:20:20.640 --> 0:20:23.040 those they can run their own nodes. You don't have 0:20:23.119 --> 0:20:25.919 to go through an exchange to do things um, and 0:20:25.960 --> 0:20:29.000 they can figure it out away from these exchanges. But 0:20:29.040 --> 0:20:32.000 when you're have k y C and a m L 0:20:32.320 --> 0:20:35.159