WEBVTT - Why Now Is the Moment for Bitcoin and Gold 0:00:03.120 --> 0:00:09.480 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.560 --> 0:00:13.239 Hello, it's Maren sum set Web here. We've got a 0:00:13.480 --> 0:00:16.120 very special episode of Marrin Talks Money for you this week. 0:00:16.160 --> 0:00:19.400 As regular listens to the show, you will know gold 0:00:19.480 --> 0:00:21.920 versus Bitcoin is a debate we love to have on 0:00:21.960 --> 0:00:25.360 the show every week. In fact, how I end every episode. 0:00:25.400 --> 0:00:27.800 So we thought, rather than just saving that question for 0:00:27.840 --> 0:00:30.800 the end of every show, we'd make an entire show 0:00:31.040 --> 0:00:33.680 around it. So this week we bring you the conversation 0:00:33.760 --> 0:00:36.280 I had with Charlie Morris, chief investment officer and founder 0:00:36.320 --> 0:00:39.680 of Fike Tree, and Alexander Charter's fund manager at Ruffer 0:00:39.960 --> 0:00:43.159 in front of an actual, real live audience at Bloomberg 0:00:43.159 --> 0:00:46.720 headquarters in London about which of these assets they would 0:00:46.760 --> 0:00:50.720 hold and why. But first, as always, senior reporter and 0:00:50.760 --> 0:00:52.800 author of the Money Distilled Newslater, which by the way, 0:00:52.880 --> 0:00:55.960 is excellent sign up if you have not already written 0:00:56.000 --> 0:00:58.440 by John Steppeck And here he is with me to 0:00:58.840 --> 0:01:02.760 chat John Man, John who knows that we are a 0:01:02.800 --> 0:01:04.240 bit frustrated with him. 0:01:04.360 --> 0:01:07.280 The list is endless for sure. Who you're a filmed to? 0:01:07.959 --> 0:01:10.000 Oh, come on, you must have listened to poor old 0:01:10.240 --> 0:01:12.600 well you know how we used to say Portries and me. 0:01:12.920 --> 0:01:16.600 We're going to start saying poor Richie Sunac, poor Richie 0:01:16.600 --> 0:01:20.760 sac As he unveiled what they call a seventeen billion 0:01:20.880 --> 0:01:25.000 pound package of tax cuts, he says, I am not 0:01:25.280 --> 0:01:28.399 blind to the fact people are frustrated with me, and 0:01:28.440 --> 0:01:33.039 he admitted that he's not got everything right now. I 0:01:33.120 --> 0:01:36.280 know you've looked at the manifesto. Is he ever going 0:01:36.319 --> 0:01:38.480 to get anything right? 0:01:39.120 --> 0:01:40.040 Actually? Know what? 0:01:40.240 --> 0:01:43.360 The thing that the aspire to do, which is getting 0:01:43.400 --> 0:01:46.800 rid in national insurance is a good aspiration. 0:01:47.680 --> 0:01:49.200 Why didn't they do it a decade ago? 0:01:49.280 --> 0:01:49.560 Though? 0:01:50.080 --> 0:01:52.640 I mean yeah, I mean basically everything that's on the manifesto. 0:01:52.680 --> 0:01:54.280 You can either say, well, walkie, if you think this 0:01:54.320 --> 0:01:56.720 is a good idea, why didn't you try it X 0:01:56.800 --> 0:01:58.840 number of years ago? And a lot of the things 0:01:58.880 --> 0:02:01.760 in the manifesto actually thought, look that this idea bringing 0:02:01.840 --> 0:02:03.280 back help to buy? 0:02:03.400 --> 0:02:06.720 Oh god, but it is interesting, isn't torupt have to 0:02:06.720 --> 0:02:08.160 interrupt because you mentioned helped to buy? 0:02:08.120 --> 0:02:08.160 It? 0:02:08.280 --> 0:02:12.920 Is like presses every button, every button? You know how 0:02:13.120 --> 0:02:16.239 sometimes people might make a policy and they think it 0:02:16.320 --> 0:02:18.840 might work and it sounds good and they haven't got 0:02:19.400 --> 0:02:22.840 actual evidence to show that it's a rubbish policy. Yeah, 0:02:23.480 --> 0:02:26.079 helped to buy isn't like that because we've had it 0:02:26.120 --> 0:02:30.800 before for yolks, and we know it's a terrible policy. 0:02:31.160 --> 0:02:34.160 We know that in areas of high demand, all it 0:02:34.240 --> 0:02:36.280 does is push out prices for first time buyers. 0:02:36.320 --> 0:02:36.799 We know that. 0:02:36.919 --> 0:02:41.880 Why would you reintroduce it when you already know that 0:02:42.120 --> 0:02:44.440 it's a subsidy program for house builders. 0:02:44.720 --> 0:02:48.519 I think that it's mostly because the Vares. It seemed 0:02:48.560 --> 0:02:53.079 that the first time buyers don't fully appreciate that. And 0:02:53.680 --> 0:02:56.639 you are absolutely righty by me because actually another side 0:02:56.639 --> 0:03:01.040 effect that helped to buy Hide Boys rightly led to 0:03:01.160 --> 0:03:04.560 the person in chief executive getting that massive pay package, 0:03:05.160 --> 0:03:07.800 and that in turn led to the I think I 0:03:07.840 --> 0:03:10.040 think that was the tipping point for chief executive pay 0:03:10.040 --> 0:03:12.680 in this country. It became the point at which all 0:03:12.800 --> 0:03:17.120 the you know, the kind of advisory committees said no, 0:03:17.480 --> 0:03:20.119 we're not We're not having this anymore. And now we've 0:03:20.120 --> 0:03:22.239 got you know, the new regulators kind of pushing back 0:03:22.280 --> 0:03:24.520 against that and saying we like, there's no law saying 0:03:24.880 --> 0:03:28.400 that ukchief executs can't have packages done more like us once. 0:03:28.639 --> 0:03:31.160 So that's interesting in itself. You know, you can argue 0:03:31.200 --> 0:03:35.760 that you know, Helped to Buy directly affected the health 0:03:35.800 --> 0:03:39.240 of UK capital markets by drawing attention to one particularly 0:03:39.320 --> 0:03:41.119 egregious people. 0:03:40.960 --> 0:03:43.320 It did, and getting us into a situation where we 0:03:43.400 --> 0:03:46.600 have chief executives across the UK talking about shifting their left, 0:03:46.720 --> 0:03:49.160 listening to the US they get pay properly, or just 0:03:49.280 --> 0:03:51.040 leaving and going to the US so they can get pay, 0:03:51.080 --> 0:03:53.200 probably Ashted being the most recent example of that. 0:03:53.320 --> 0:03:53.480 Right. 0:03:53.600 --> 0:03:55.240 Anyway, let's not get hang up on help to Buy. 0:03:55.280 --> 0:03:57.000 John and I have written about this a lot over 0:03:57.000 --> 0:03:59.320 the years. Go back read our columns on it, but 0:03:59.400 --> 0:04:02.520 basically rubbish policy not required. 0:04:03.480 --> 0:04:08.000 Well, they're talking about building more houses again, kind of like, well, okay, 0:04:08.040 --> 0:04:11.120 that's fine, but again, you have been in power for 0:04:11.120 --> 0:04:14.320 fourteen years for whatever reason. Now whether you think building 0:04:14.320 --> 0:04:16.120 more hous is a good idea or not. And I 0:04:16.120 --> 0:04:19.800 actually think it's more about reform and planning than necessarily 0:04:19.839 --> 0:04:22.080 saying we have to have this number of houses. And 0:04:22.120 --> 0:04:24.880 I think actually that will probably quite often lead to 0:04:24.960 --> 0:04:27.280 disaster because you build houses where people don't actually want 0:04:27.320 --> 0:04:27.600 to be. 0:04:28.160 --> 0:04:30.359 Whereas if you reform planning, the market will give you 0:04:30.400 --> 0:04:32.320 houses where people need houses. 0:04:32.960 --> 0:04:35.320 Yeah exactly, but it's kind of like, well, why do 0:04:35.360 --> 0:04:36.960 you think that's saying that you're going to build one 0:04:37.000 --> 0:04:39.600 point six million is somehow going to magic one point 0:04:39.640 --> 0:04:42.359 six million houses out of nowhere when you've been saying 0:04:42.800 --> 0:04:46.240 we want to build houses. It's not as if this 0:04:46.320 --> 0:04:48.000 is a new commitment. It's not as if they've turne 0:04:48.000 --> 0:04:51.680 around and said, oh, we don't like building houses. Now 0:04:51.839 --> 0:04:53.719 they're going to find the magic key to do it. 0:04:54.000 --> 0:04:56.120 I just think it's that sense that you're going to 0:04:56.160 --> 0:05:00.120 get more of the same. There's all the kind of 0:05:00.800 --> 0:05:04.080 kidding on about fiscal responsibility as well, which is the 0:05:04.160 --> 0:05:06.760 irritating thing because obviously all of this is going to 0:05:06.839 --> 0:05:11.200 cost a bit more money, and so they're saying, okay, 0:05:11.200 --> 0:05:12.800 well why are you going to raise the money? And 0:05:12.839 --> 0:05:14.880 we're going to raise the money. I think it's six 0:05:14.920 --> 0:05:18.880 billion in tax avoidance, which is you know, kind of 0:05:19.920 --> 0:05:21.280 you're kind of like, well, look at again, if that 0:05:21.400 --> 0:05:23.400 six billion is just sitting around, how come you're not 0:05:23.440 --> 0:05:24.560 already collecting it. 0:05:25.800 --> 0:05:27.880 To get that last year or the year before or 0:05:27.920 --> 0:05:30.440 the year before. It's just been sitting there down the 0:05:30.440 --> 0:05:33.120 back of the South were waiting for you exactly. 0:05:33.200 --> 0:05:36.839 And then it's twelve billion in welfare reform. And you know, 0:05:36.960 --> 0:05:40.840 while I'm sure i'd be among the first to say yes, 0:05:40.920 --> 0:05:43.280 I'm sure there are areas where we can do welfare 0:05:43.320 --> 0:05:46.000 reform and where it's inefficient and all the rest of it, 0:05:46.279 --> 0:05:49.560 the question again is, well, why we're at the situation 0:05:49.720 --> 0:05:52.760 where there's apparently just twelve billion line around to be 0:05:52.839 --> 0:05:56.920 picked up from the kind of benefits system, and it's 0:05:57.000 --> 0:05:59.440 and what have we been doing without it? Out of 0:05:59.480 --> 0:06:01.680 the sake of for the sake of what you know, 0:06:02.160 --> 0:06:04.159 It's like, why are you suddenly going to get more 0:06:04.160 --> 0:06:06.039 efficient if we vote for you? 0:06:06.080 --> 0:06:06.279 Now? 0:06:07.000 --> 0:06:09.520 You know, it's one thing if labor says stuff like this, 0:06:09.600 --> 0:06:13.000 because although you know they're almost certainly talking rubbish as well, 0:06:13.160 --> 0:06:15.400 at least they haven't actually been in charge for any 0:06:15.440 --> 0:06:16.760 period of time, so. 0:06:17.400 --> 0:06:19.280 Them, why didn't you do it? Now? 0:06:19.320 --> 0:06:21.200 Listen, One of the things that you and I've talked 0:06:21.240 --> 0:06:23.239 about a lot of the narrowing of the tax base 0:06:23.720 --> 0:06:27.440 and the percent of tax station paid that comes from 0:06:27.480 --> 0:06:29.680 the people at the very top. And you pointed out 0:06:29.720 --> 0:06:33.599 to me earlier really eye catching statistic from the IFS 0:06:33.760 --> 0:06:36.440 which tells us that a higher proportion of over sixty 0:06:36.480 --> 0:06:39.479 five is now pay income tax than working people pay 0:06:39.520 --> 0:06:40.159 income tax. 0:06:40.920 --> 0:06:43.960 In twenty ten twenty eleven, it was forty eight percent 0:06:44.160 --> 0:06:48.239 over sixty fives paid income tax, and it's now sixty 0:06:48.279 --> 0:06:54.480 five percent, whereas the number of workers paying income tax 0:06:54.520 --> 0:06:58.159 has fallen from sixty one percent in two eleven to 0:06:58.240 --> 0:06:59.839 fifty eight percent. 0:07:00.880 --> 0:07:01.000 Now. 0:07:01.000 --> 0:07:02.960 It is expected to go back up to sixty six 0:07:03.000 --> 0:07:07.359 percent by the twenty twenty nine tax year. But it just, 0:07:08.279 --> 0:07:10.160 I mean, it just shows you. I mean, it's partly 0:07:10.400 --> 0:07:13.120 because pensioners actually did used to have a slightly higher 0:07:13.120 --> 0:07:16.360 personal allowance, but it's mostly because they've had pretty decent 0:07:16.400 --> 0:07:21.520 income growth. Whereas also obviously a lot of the Conservative 0:07:21.560 --> 0:07:24.560 Party policies have been named at taking the lowest paid 0:07:24.600 --> 0:07:29.600 people out of the income tax net altogether, whether or 0:07:29.640 --> 0:07:32.520 not that's actually a good idea, And I think our 0:07:32.680 --> 0:07:35.880 view is the problemise of if you rely too much 0:07:35.920 --> 0:07:39.560 on the people at the top, because what is that 0:07:39.600 --> 0:07:41.360 they share the income tax payer by the top ten 0:07:41.360 --> 0:07:44.760 percent income taxpayers has gone up from fifty four percent 0:07:45.160 --> 0:07:49.040 to sixty percent now, so you're becoming ever more reliant 0:07:49.080 --> 0:07:52.680 on our very small group of taxpayers to prop everyone 0:07:52.720 --> 0:07:53.200 else up. 0:07:53.600 --> 0:07:55.440 Yeah, and you could always say that you have an 0:07:55.400 --> 0:07:58.440 a lot of people who who by not paying any 0:07:58.480 --> 0:08:01.000 income tax at all, maybe and have quite the same 0:08:01.080 --> 0:08:04.840 stake in how taxation revenues are spent than other people. 0:08:06.480 --> 0:08:08.880 Old fashioned argument, but I think it's still got some 0:08:08.960 --> 0:08:09.800 validity to it. 0:08:10.240 --> 0:08:12.880 Yeah, yea, I broadly agree with that, because I think 0:08:12.880 --> 0:08:15.680 when people go from not paying tax they suddenly pay 0:08:15.680 --> 0:08:18.000 in tax. They get a kind of wake up call. 0:08:19.560 --> 0:08:22.480 And the problem is if if nor win't the kind 0:08:22.480 --> 0:08:24.880 of minimum made jobs there's actually pay an income tax, 0:08:24.920 --> 0:08:28.440 then I think there's a there's a lacky participation in 0:08:28.960 --> 0:08:30.160 that funny kind of way. 0:08:30.680 --> 0:08:33.520 Well, I say that just because I'm fascinated by when, 0:08:34.400 --> 0:08:34.679 you know. 0:08:34.679 --> 0:08:37.400 The young people around me when they get their first job, 0:08:37.440 --> 0:08:39.240 waitressing or whatever it is, and they come home with 0:08:39.280 --> 0:08:42.760 their first paypacket, an emergency tax has been taken out 0:08:43.400 --> 0:08:45.679 and they lived in there like, oh my god, they 0:08:45.720 --> 0:08:49.160 took all my money away, like yes they did, Yes 0:08:49.240 --> 0:08:51.520 they did, and they're going to keep doing that for 0:08:51.600 --> 0:08:54.920 your whole life. And it's a horrible shock when they 0:08:55.000 --> 0:08:57.760 see that number and they realize that's how it actually works. 0:08:57.760 --> 0:09:00.000 They think they are under certain amount. They added up 0:09:00.040 --> 0:09:02.360 their hours in their head, and they've added up their 0:09:02.400 --> 0:09:05.120 percentage of the tips, etc. Get the paypack it in half. 0:09:05.120 --> 0:09:09.400 It's gone faithfully. What you're seeing is the instantly becomes 0:09:09.440 --> 0:09:12.559 somewhat more conservative, and yet it's been a conservative government 0:09:12.559 --> 0:09:14.600 that's pushed them all out of the tax. 0:09:16.360 --> 0:09:16.960 Envelope. 0:09:17.080 --> 0:09:19.120 I think it was Nick Clegg who had this a 0:09:19.160 --> 0:09:21.240 little idea that you should get as many people as 0:09:21.240 --> 0:09:23.480 possible out of the tax neck and they should make 0:09:23.520 --> 0:09:26.480 the allowance bigger and bigger and bigger, so that fewer 0:09:26.480 --> 0:09:28.440 people at the bottom paid any tax at all. I 0:09:28.440 --> 0:09:30.600 remember discussing it with him once and I get that, 0:09:30.920 --> 0:09:32.960 and you know, you're quite right. The more of anyone's 0:09:32.960 --> 0:09:35.920 money they get to keep, the better. But maybe if 0:09:36.200 --> 0:09:39.200 we all have to be part of this system, everyone 0:09:39.240 --> 0:09:41.920 should be paying even a tiny bit into it, and 0:09:42.040 --> 0:09:44.320 understanding that they pay a tiny bit into it, and 0:09:44.400 --> 0:09:47.080 so they have some stake in how it's spent as well. 0:09:48.160 --> 0:09:50.760 I don't know philosophical arguments that they're probably too much 0:09:50.800 --> 0:09:53.320 for this podcast, too much for this podcast, But I 0:09:53.360 --> 0:09:54.800 tell you what, John, you know what you need. And 0:09:54.880 --> 0:09:59.760 an era of debt and deficits and political instability and 0:10:00.080 --> 0:10:04.600 changing governments here in Europe and the US everything's a 0:10:04.600 --> 0:10:07.720 bit uncertain. Bit confuser that there's a lot more instability 0:10:07.760 --> 0:10:09.480 inflation ahead. Do you know what you need? 0:10:09.600 --> 0:10:11.319 I can't possibly imagine. 0:10:17.520 --> 0:10:20.440 Welcome to Meren Drugs Money, the podcast in which people 0:10:20.440 --> 0:10:23.360 who know the markets explain the markets. I'm Meren Sumset Web. 0:10:23.640 --> 0:10:26.520 Let's get my conversation with Charlie Morris, chief investment officer, 0:10:26.520 --> 0:10:29.320 I'm founder with bike Tree and Alexander Charter's fund manager 0:10:29.440 --> 0:10:32.280 Rougher at our special event in the Bloomberg offices in London. 0:10:32.360 --> 0:10:34.640 Cannopis and drinks by the way, Sorry you'll wren't there. 0:10:34.800 --> 0:10:37.920 Focusing on the question bitcoin or gold. Now, as I mentioned, 0:10:37.960 --> 0:10:40.200 it's a question I ask all my guests, so here's 0:10:40.240 --> 0:10:43.280 a quick reminder of some of the answers we've received 0:10:43.440 --> 0:10:44.120 in the past. 0:10:45.520 --> 0:10:49.240 I'd probably go for gold, bitcoin gold, bitcoin gold, gold, 0:10:49.679 --> 0:10:53.760 bick gold gold. For me, old gold would not be bitcoin, 0:10:53.800 --> 0:10:55.559 but I think I could do better than either. 0:10:55.679 --> 0:11:04.840 Really, so overwhelming support for gold among the Marion Dogs 0:11:04.880 --> 0:11:08.199 Money guests, but not so black and white for Charlie 0:11:08.240 --> 0:11:12.040 and Alexander. I start the conversation by asking alex why 0:11:12.200 --> 0:11:16.440 is it that we're talking about holding assets like bitcoining gold. Right, now, 0:11:16.720 --> 0:11:19.960 what is it about geopolitics? What is it about everything 0:11:20.000 --> 0:11:22.320 going on around the world that means that you need 0:11:22.880 --> 0:11:26.319 this kind of anti fragile insurance asset. 0:11:38.520 --> 0:11:40.120 I think the headline is we're in a period of 0:11:40.120 --> 0:11:44.240 extraordinary regime change for markets. We've had forty years of 0:11:44.520 --> 0:11:50.439 falling inflation, interest rates, economic volatility, and very atypical geopolitical peace. 0:11:51.040 --> 0:11:53.199 And that was driven by things like China. 0:11:52.960 --> 0:11:57.080 And the former Soviet Union rejoining the global trading system, 0:11:57.160 --> 0:12:01.679 massive positive supply shock, cheap energy, most favorable demography of 0:12:01.720 --> 0:12:06.439 all time, literally, small state revolution, you name it, plus tech. 0:12:06.760 --> 0:12:09.920 It was all disinflationary and so it's been manner from 0:12:10.000 --> 0:12:12.520 heaven for investors for four decades. You've basically just have 0:12:12.679 --> 0:12:16.040 to hold something equities, bonds, real estate. It's all gone 0:12:16.080 --> 0:12:20.720 up and asset love low and stable rates and inflation. 0:12:20.800 --> 0:12:24.520 So if anything comes along to change that dynamic, the 0:12:24.840 --> 0:12:29.520 portfolio logic that's dominated the last generation also needs to change. 0:12:30.040 --> 0:12:34.040 So what's happening now. You've got fragmentation of world order, 0:12:34.160 --> 0:12:37.040 so retooling of supply chains because relations with China and 0:12:37.040 --> 0:12:39.679 the West are much more fraud You've got more expensive 0:12:39.880 --> 0:12:44.199 and potentially volatile energy. You've got the big state coming 0:12:44.240 --> 0:12:48.320 back in large size in the economy with fiscal policy 0:12:48.440 --> 0:12:52.520 driving much more vol Demography is reversing. You've got the 0:12:52.520 --> 0:12:55.559 biggest population bust of all human history. So if you 0:12:55.600 --> 0:12:57.920 put it together, you've got a more inflation prone and 0:12:58.040 --> 0:13:02.480 volatile environment. That means that you can't rely on things 0:13:02.559 --> 0:13:05.560 like the negative stock bond correlation that's dominated for a generation. 0:13:05.679 --> 0:13:08.720 So you need alternsive assets, real assets that are anti 0:13:08.720 --> 0:13:11.240 fragile to get you through what we think comes next. 0:13:11.320 --> 0:13:16.160 Okay, so basically everything that starts with the D has turned. Yes, Demographics, 0:13:16.480 --> 0:13:21.640 end of the peace evidend, decarbonization, deglobalization. 0:13:22.800 --> 0:13:23.760 That's the big change. 0:13:23.840 --> 0:13:26.160 But we look around US now and we see inflation falling, 0:13:26.520 --> 0:13:28.720 and you know, thank which you're seeing it's very kindly 0:13:28.880 --> 0:13:30.720 auto inflation back to nearly two percent for us. 0:13:30.760 --> 0:13:35.520 Yeah, well done him, amazing, amazing. Yeah. 0:13:35.559 --> 0:13:38.400 Look, the key thing is inflation volatility. So no one's 0:13:38.400 --> 0:13:40.040 saying it's not going to come down. It's just that 0:13:40.120 --> 0:13:43.920 probably in the era ahead, the floor will typically be 0:13:44.000 --> 0:13:46.920 two percent inflation rather than a two percent ceiling as 0:13:46.960 --> 0:13:49.160 we have for the last generation. And you only need 0:13:49.280 --> 0:13:52.720 very small changes in the amount of inflation around to 0:13:52.800 --> 0:13:56.800 fundamentally change cross asset correlation. So in plain English, when 0:13:56.800 --> 0:13:59.120 there's not much inflation around, bonds and equities tend to 0:13:59.120 --> 0:14:00.160 be negatively correlated. 0:14:00.080 --> 0:14:01.960 To your bonds go up when your actities go down. 0:14:02.400 --> 0:14:04.360 But for most of history, if I drew a chance 0:14:04.440 --> 0:14:06.880 that back to the Napoleonic Wars, you'd find that bonds 0:14:06.920 --> 0:14:10.240 and ecpties tend to be positively correlated. So if there's 0:14:10.240 --> 0:14:13.520 a bit more inflation, it will be positively correlated more often. 0:14:13.800 --> 0:14:16.680 You need other assets. Enter the conversation tonight. 0:14:16.920 --> 0:14:18.360 Okay, I want to ask you one more thing before 0:14:18.360 --> 0:14:20.120 we move on, which is you and I've talked quite 0:14:20.120 --> 0:14:21.800 a lot over the last four or five years about 0:14:21.800 --> 0:14:26.000 this regime change, about regime change in markets, regime change geopolitically, etc. 0:14:26.560 --> 0:14:28.040 And it's a story that I think what we. 0:14:28.000 --> 0:14:32.680 Both feel is is right. But what could happen to 0:14:32.760 --> 0:14:36.600 make you feel that this story is wrong, That perhaps 0:14:36.640 --> 0:14:38.640 it isn't so bad, that perhaps we're just going to 0:14:38.720 --> 0:14:41.560 slip back into the previous path and carry on as was. 0:14:43.240 --> 0:14:44.920 There are a few things, But first of all, I 0:14:44.920 --> 0:14:47.080 wouldn't necessarily characterize it as bad. 0:14:47.400 --> 0:14:50.160 It's just different. Actually, it's very tirely. 0:14:49.920 --> 0:14:51.280 Give you that different than there are lots of good 0:14:51.280 --> 0:14:52.320 things about it exactly. 0:14:52.360 --> 0:14:54.480 So it's just a different opportunity set and a different 0:14:54.480 --> 0:14:57.440 set of assumptions. What could change if you had a 0:14:57.640 --> 0:15:01.960 dramatic change in relations between the US and China, if 0:15:01.960 --> 0:15:07.280 you had a monster productivity miracle around say Ai, if 0:15:07.280 --> 0:15:09.760 there was some sort of other technological dis sex machiner 0:15:09.760 --> 0:15:10.720 that solves the problem. 0:15:11.120 --> 0:15:12.840 Unfortunately, given the. 0:15:12.720 --> 0:15:16.080 Massive debt situation, because as those rates fell for forty years, 0:15:16.680 --> 0:15:18.840 debt ran up and people didn't think it was a 0:15:18.840 --> 0:15:21.880 problem because the cost of servicing that debt was also 0:15:22.000 --> 0:15:24.400 very low because rates were coming down. Because now rates 0:15:24.400 --> 0:15:26.480 have gone back up, people realize it is a problem, 0:15:26.680 --> 0:15:28.840 and paying for the reversal of those d's that you 0:15:28.960 --> 0:15:32.080 described earlier is very very expensive when you've already got 0:15:32.760 --> 0:15:35.160 debt to GDP ratios at all time highs and the 0:15:35.200 --> 0:15:37.280 debt service ratio shooting up quickly. 0:15:37.560 --> 0:15:41.320 Okay, Charlie, when you look at this situation that he's outlined, 0:15:41.400 --> 0:15:42.360 is that how you see it? 0:15:43.040 --> 0:15:46.040 Absolutely? I think that when you have a large high 0:15:46.120 --> 0:15:49.880 debt GDP ratios and you've got structural deficits and it's 0:15:49.920 --> 0:15:53.040 a year of elections, and no one is talking about 0:15:53.040 --> 0:15:56.520 bringing down the deficit. Not a single actor in any 0:15:56.560 --> 0:15:59.640 parliament here or in America or in Europe cares about 0:15:59.680 --> 0:16:03.000 that deficits anymore. So it's only going one way. And 0:16:03.040 --> 0:16:05.880 I'd also say that the money supply has been a 0:16:05.960 --> 0:16:08.160 growth has been very very low in the last few years. 0:16:08.160 --> 0:16:12.200 Come around the world, and what we've seen is, you know, 0:16:12.640 --> 0:16:16.600 quite impressive behavior from asset prices, despite the fact there 0:16:16.640 --> 0:16:20.040 hasn't been vast amounts of money creation since twenty twenty one. 0:16:20.520 --> 0:16:22.400 And that really tells you that the pent up demand 0:16:23.120 --> 0:16:26.040 for inflation. Once they start printing money again, what would 0:16:26.080 --> 0:16:27.200 happen in that environment. 0:16:27.840 --> 0:16:30.720 Okay, so we can't trust fit anymore. Well, not that 0:16:30.720 --> 0:16:32.440 we ever could trust Fit, but we're in a situation 0:16:32.480 --> 0:16:34.120 where we can trust Fit even less than we've been 0:16:34.120 --> 0:16:35.520 able to over the last couple of decades. 0:16:35.920 --> 0:16:38.080 Fear money is brilliant if you you know, if you 0:16:38.120 --> 0:16:40.360 treat it carefully, and you know, there are some countries 0:16:40.400 --> 0:16:42.080 that really don't, and we've seen that, We've seen what 0:16:42.120 --> 0:16:44.200 happens there in place like Turkey and Argentina. 0:16:44.280 --> 0:16:45.320 Do we treat it carefully? 0:16:45.840 --> 0:16:47.960 No, we don't. We once did, but don't we don't anymore. 0:16:48.360 --> 0:16:51.000 If you go back to seventy one, when Nixon pulled 0:16:51.280 --> 0:16:55.120 America off the gold standards, you had a price of 0:16:55.120 --> 0:16:57.520 thirty five dollars a try ounce. The price on the 0:16:57.560 --> 0:17:01.080 screen when we do this podcast is twenty three thirty. 0:17:01.480 --> 0:17:03.920 So you've lost in the principal reserve, the currency of 0:17:04.000 --> 0:17:10.639 the world. You've lost ninety eight percent plus of your value. Okay, 0:17:11.160 --> 0:17:11.840 don't trust fit. 0:17:12.160 --> 0:17:17.399 Don't trust fear. Anyone trust fit? No, No one trusts fit. Right, 0:17:17.480 --> 0:17:20.920 So in this environment, we can't invest in the way 0:17:20.920 --> 0:17:23.000 that we have all the way previous generators have. We 0:17:23.000 --> 0:17:24.680 can't look back at the last forty years instead of 0:17:24.760 --> 0:17:28.160 we replicate that will be absolutely fine. So what does 0:17:28.400 --> 0:17:30.560 let's go back to you, Alex, what does a portfolio 0:17:30.640 --> 0:17:31.600 look like? Now? 0:17:32.320 --> 0:17:33.479 What should it look like? 0:17:33.760 --> 0:17:35.800 Well, it's going to have a wider range of assets, 0:17:35.840 --> 0:17:39.720 and it probably than the traditional equity and bond setup 0:17:39.720 --> 0:17:41.600 that's done so well over the last twenty five years 0:17:41.720 --> 0:17:45.560 or so. That means using commodities more often, it means 0:17:45.640 --> 0:17:49.960 using FX, It means using anti fragile assets like derivatives, 0:17:50.240 --> 0:17:52.840 which in a world where you've got higher correlations between 0:17:52.880 --> 0:17:55.240 cash assets if they all fall together, you want to 0:17:55.240 --> 0:17:58.280 protect your self, you need derivatives as well, and of course, 0:17:58.320 --> 0:18:02.639 mon that will include anti feat assets, investments in a 0:18:02.680 --> 0:18:06.320 bear market, in institutional trust as Bank of American Memory described, 0:18:06.359 --> 0:18:07.480 it not includes gold. 0:18:07.760 --> 0:18:10.600 Okay, explain to us briefly what you mean by anti. 0:18:10.320 --> 0:18:15.800 Fragile things that profit from volatility and instability in the situation. 0:18:15.960 --> 0:18:18.720 So you don't just want to survive the sort of 0:18:18.760 --> 0:18:20.320 stress that the system will throw you. 0:18:20.320 --> 0:18:21.399 You want to be able to thrive. 0:18:22.200 --> 0:18:27.080 Okay, Portfolios, how do they look to you in this environment? 0:18:27.160 --> 0:18:28.920 And I know that you focus at the moment mostly 0:18:28.960 --> 0:18:30.639 on bitcoin and gold, but obviously you have a long 0:18:30.760 --> 0:18:32.760 history of investing in all sorts of things. 0:18:33.119 --> 0:18:35.000 I still do that, by. 0:18:34.920 --> 0:18:37.960 The way, Sorry, only readly golden bitcoin. 0:18:38.320 --> 0:18:40.919 Yeah, we're talking about gold and bitcoin today. But of course, 0:18:41.480 --> 0:18:43.080 you know, I think that if you can take a 0:18:43.119 --> 0:18:46.320 more resilient approach to portfolio management than normal. Obviously we're 0:18:46.320 --> 0:18:48.600 in extraordinary times because we've seen you know, we've got 0:18:48.600 --> 0:18:52.200 these indices. It's very very popular these days to track 0:18:52.240 --> 0:18:55.040 indicies and have a passive portfolio, and you know, low 0:18:55.119 --> 0:18:58.359 fees a theme with this podcasts have always sort of 0:18:59.080 --> 0:19:01.399 you know, count to fition through that. But then you 0:19:01.440 --> 0:19:03.879 have a huge concentration risk. And it's not just the 0:19:03.960 --> 0:19:06.119 S and P five hundred or the naset that's concentrated. 0:19:06.560 --> 0:19:09.320 The footsier is half, the footsie is twelve stocks. And 0:19:09.560 --> 0:19:11.480 you see this all over the place. And I think 0:19:11.480 --> 0:19:14.680 if you embrace good old fashioned value fundamental investing, you're 0:19:14.720 --> 0:19:17.080 in a better position because you're prepared for the unknown. 0:19:17.359 --> 0:19:19.120 You don't know what's going to go wrong, and when 0:19:19.320 --> 0:19:21.560 you just know that it will at some point, and 0:19:21.840 --> 0:19:25.320 you know, greater diversification. Miss Alex has said, if bonds 0:19:25.359 --> 0:19:28.160 and equities are basically correlated, then that means when one 0:19:28.200 --> 0:19:30.679 goes up, the other one, you know, goes up as well, 0:19:30.720 --> 0:19:32.440 and they go down together. That's what it means. And 0:19:32.640 --> 0:19:35.760 therefore we need to find other additional sources of diversification. 0:19:36.200 --> 0:19:39.080 The traditional one is gold, and now it's got a 0:19:39.119 --> 0:19:44.840 thread called bitcoin, digital gold, digital gold. 0:19:45.119 --> 0:19:46.919 Right, Okay, well why don't we talk about gold? Your 0:19:46.920 --> 0:19:48.800 bother al was the itching to talk about gold. I 0:19:48.880 --> 0:19:53.879 can't keep your furt right, So Alex, why gold? 0:19:55.800 --> 0:19:58.639 It's got a five now five thousand year pedigree of 0:19:58.680 --> 0:20:03.919 being the hard money choice. It's the preferred neutral FX 0:20:03.960 --> 0:20:08.240 asset and there's no counterparty for it. It's inert, has 0:20:08.280 --> 0:20:11.560