WEBVTT - Why It’s Time to Invest in Mining 0:00:02.720 --> 0:00:12.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.160 --> 0:00:20.640 Welcome to Meren Dorg's Money, the podcast in which people 0:00:20.680 --> 0:00:22.840 who know the markets explain the markets. 0:00:22.920 --> 0:00:24.000 I'm Maren Sumset Web. 0:00:24.280 --> 0:00:26.680 This week we are spending the episode focused on one 0:00:26.760 --> 0:00:30.240 particular market, commodities. It's been a while since we discussed 0:00:30.240 --> 0:00:32.280 the sector, so we have invited on two experts to 0:00:32.360 --> 0:00:35.440 join us in a conversation about everything metal and mining. 0:00:35.680 --> 0:00:39.440 We talk about the commodities themselves, the minds they come from, 0:00:39.479 --> 0:00:42.839 and the relationship between those minds and the equities that 0:00:42.920 --> 0:00:45.600 represent them. We talk about copper, we talk about gold, 0:00:45.640 --> 0:00:48.800 we talk about platinum, and we talk about silver. So 0:00:48.880 --> 0:00:51.320 in our studio we have Nicky Shield's head of Metal 0:00:51.360 --> 0:00:55.720 Strategy at mks PAMP, a group that specializes in precious metals, 0:00:55.720 --> 0:00:58.480 and in our London studio we have Heavy Hamburg, who 0:00:58.520 --> 0:01:01.960 is one of the world's most influenced mining invested Evy 0:01:02.040 --> 0:01:04.720 is co manager of the black Rock World Mining Trust 0:01:04.920 --> 0:01:08.800 and global head of Thematic and Sector Investing at black Rock, 0:01:08.840 --> 0:01:12.479 as well as being head of the Natural Resources Equity team. 0:01:12.560 --> 0:01:15.559 Nick and every Welcome to Merrin Talks Money. So Everie, 0:01:15.560 --> 0:01:17.640 why don't I start with you and just tell me 0:01:17.720 --> 0:01:19.560 what it is that you think of when you talk 0:01:19.560 --> 0:01:22.320 about commodities. What are we talking about here? How is 0:01:22.360 --> 0:01:24.000 this sector different to the rest of the market. 0:01:24.560 --> 0:01:25.959 You could go anywhere with that question. 0:01:26.280 --> 0:01:26.959 I know I wanted. 0:01:27.040 --> 0:01:28.840 I wanted to have fun by asking at the very 0:01:28.840 --> 0:01:31.000 beginning of bitcoins a commodity, but I'd have heard that. 0:01:31.120 --> 0:01:31.840 Leave that's the end. 0:01:32.040 --> 0:01:36.680 It's fascinating if you think about commodities and the fact 0:01:36.760 --> 0:01:41.520 that we all use them every day, and some of 0:01:41.560 --> 0:01:44.959 them are more visible to us than others. So if 0:01:44.959 --> 0:01:47.039 you go to the petrol station then you fill up 0:01:47.080 --> 0:01:49.120 your car, you know what the price of fuel is 0:01:49.160 --> 0:01:52.640 and how that changes. If you go shopping at the supermarket, 0:01:52.680 --> 0:01:56.120 you know what the cost of agricultural commodities are because 0:01:56.120 --> 0:01:58.240 you can see how the price changes. But most of 0:01:58.280 --> 0:02:01.200 the commodities that we take for granted, you know, the 0:02:01.240 --> 0:02:05.000 metals and so on, have very very low levels of 0:02:05.120 --> 0:02:08.680 visibility in terms of how we consume them. And I 0:02:08.720 --> 0:02:11.760 think that society as a whole is rather complacent about 0:02:11.840 --> 0:02:16.720 their supply and the invisibility of the price changes. And 0:02:16.800 --> 0:02:19.000 I guess the fact that they're always there and we 0:02:19.040 --> 0:02:21.840 take them for granted means that we don't pay that 0:02:21.960 --> 0:02:25.360 much attention to them, and I think that's reflected in 0:02:25.960 --> 0:02:30.600 how people value the companies that produce them, and so 0:02:31.240 --> 0:02:34.560 to us, theres very very long term investors in this space. 0:02:34.600 --> 0:02:38.400 It's quite disheartening to see how lower percentage of the 0:02:38.480 --> 0:02:43.520 kind of global market cap commodity producers represent relative to 0:02:43.680 --> 0:02:47.040 how essential they are both in everyday lives but also 0:02:47.440 --> 0:02:52.000 in sustaining living standards. And it's only when you know, 0:02:52.160 --> 0:02:54.400 things go into kind of I don't know, panic mode 0:02:54.440 --> 0:02:57.280 around shortages, or you hit the front page of the 0:02:57.760 --> 0:03:01.240 media and so on, that people's interest levels rise and 0:03:01.720 --> 0:03:06.120 multiples expand or greed over where overtakes, you know, fear 0:03:06.200 --> 0:03:09.160 in terms of people wanting the exposure that the sector 0:03:09.200 --> 0:03:13.799 becomes front of mind for most financial investors, and you know, 0:03:13.840 --> 0:03:16.280 we're certainly seeing some early signs of that in the 0:03:16.320 --> 0:03:19.880 government space. But to me, I find it very confusing 0:03:20.040 --> 0:03:23.919 that something that is so essential to everybody's daily life 0:03:24.440 --> 0:03:28.920 has such a low level of interest and low multiple 0:03:29.000 --> 0:03:31.920 that the companies tend to trade on in the market 0:03:32.000 --> 0:03:35.000 relative to the businesses that actually consume them. I mean, 0:03:35.000 --> 0:03:37.920 you can't build a data center without commodities, Yet there 0:03:38.240 --> 0:03:40.840 the data center companies trade on infinite multiples. 0:03:41.160 --> 0:03:42.080 Yeah, that is interesting. 0:03:42.080 --> 0:03:43.520 We had we had a few months ago, we had 0:03:43.640 --> 0:03:46.480 ed Conway on talking about his book Material World and 0:03:46.520 --> 0:03:49.120 talking about this difference between the ethereal world and the 0:03:49.120 --> 0:03:51.560 material world, and the extent to which we've sort of 0:03:51.560 --> 0:03:54.680 forgotten that the material world is the foundation of everything, 0:03:54.680 --> 0:03:57.400 and without without the minds and without the really fealthy, 0:03:57.560 --> 0:04:00.360 grubby bit at the bottom of everything, we could all 0:04:00.400 --> 0:04:02.320 the other things that we like to talk about. 0:04:02.320 --> 0:04:02.360 It. 0:04:02.440 --> 0:04:04.960 It's just interesting how that's happened over the last couple 0:04:05.000 --> 0:04:08.120 of decades, that the foundation, the foundations of everything have 0:04:08.200 --> 0:04:11.240 been forgotten on the pyramid of need has been rather upturned. 0:04:11.680 --> 0:04:13.320 Yeah, I think you're right. I mean, it's a great 0:04:13.320 --> 0:04:14.840 book that I loved it, and I listened to it 0:04:14.880 --> 0:04:18.160 on one of the players audible. It is amazing if 0:04:18.200 --> 0:04:20.360 you think about how society has moved on through time, 0:04:20.400 --> 0:04:23.120 where basic industries were such a core part of everything, 0:04:23.560 --> 0:04:26.200 and now services are the kind of the most core 0:04:26.279 --> 0:04:29.040 part of everything. And it's just you know, usk how 0:04:29.120 --> 0:04:30.800 much value dis services really add? 0:04:31.240 --> 0:04:36.880 Oh controversial or can I add anything without without the exactly? 0:04:37.000 --> 0:04:37.440 That's what I mean. 0:04:37.480 --> 0:04:39.120 Yeah, And I suppose the other interesting part of that 0:04:39.120 --> 0:04:41.480 that will come onto later as well is energy, And 0:04:41.560 --> 0:04:44.960 there's a whole justop oil excepter plava where everyone forgets 0:04:45.000 --> 0:04:47.520 that in fact, oil is part of absolutely everything they 0:04:47.560 --> 0:04:50.159 touch and everything they feel around them, everything they see. 0:04:50.520 --> 0:04:52.159 Is that something to do with fossil fuels. 0:04:52.160 --> 0:04:55.520 But nonetheless, we've moved so far away from the understanding 0:04:55.520 --> 0:04:58.400 of the materials sector. There's a genuine belief out there 0:04:58.600 --> 0:05:00.080 that the world could continue. 0:05:00.279 --> 0:05:04.360 Yeah, I mean that's my foundations. I find a bad complacency. 0:05:04.520 --> 0:05:06.800 You're beginning to see some kind of change. I mean, 0:05:06.839 --> 0:05:08.320 I think ed Ed's book was a bit of a 0:05:08.360 --> 0:05:10.880 turning point for starters. But also looking at the papers 0:05:10.880 --> 0:05:12.400 this morning, one of the headlines on the front of 0:05:12.440 --> 0:05:16.360 the FT Sorry competitor Alert was Chinese mining acquisitions globally 0:05:16.360 --> 0:05:18.120 at their highest level since twenty thirteen. 0:05:18.200 --> 0:05:19.520 So somebody's getting it. 0:05:19.839 --> 0:05:22.120 The Chinese are up there looking at everything, buying everything, 0:05:22.160 --> 0:05:24.080 beginning to monopolize as much as they can. 0:05:24.360 --> 0:05:25.840 So let me just ask you, then, when you. 0:05:25.800 --> 0:05:27.839 Look at the sector today, what are the parts that 0:05:27.880 --> 0:05:31.000 you find most interesting? Where is it going to happen 0:05:31.040 --> 0:05:33.440 that we'll see these supply demand shocks that are going 0:05:33.480 --> 0:05:36.600 to wake people up to the importance of this area. Yeah. 0:05:37.600 --> 0:05:39.800 I hope we don't have shocks for the wrong reason, 0:05:40.040 --> 0:05:42.320 because that would be pretty bad for the environment or 0:05:42.360 --> 0:05:44.560 for safety and life and stuff. 0:05:44.760 --> 0:05:47.440 Slow surprises, let me go slow surprises. Yeah. 0:05:47.600 --> 0:05:49.640 I think it's hard to argue against the fact that 0:05:49.680 --> 0:05:52.480 the world's going to need more as life goes on. 0:05:52.960 --> 0:05:56.159 That's pretty much a given. That's definitely been the history 0:05:56.360 --> 0:05:59.200 and it's likely to continue to be the future. I 0:05:59.200 --> 0:06:01.839 think the shape of what more is is what's interesting. 0:06:02.320 --> 0:06:05.520 So when we think about the transition, I suppose you 0:06:05.839 --> 0:06:09.360 away from fossil fuels, that is a transition from fossil 0:06:09.400 --> 0:06:13.640 fuels to hard metals to industrial commodities, and the intensity 0:06:13.640 --> 0:06:17.560 of use of those commodities rises, you know, almost vertically, 0:06:18.200 --> 0:06:21.080 the more you move away from fossil fuels. Up to 0:06:21.640 --> 0:06:22.400 some long. 0:06:22.279 --> 0:06:25.279 Data can I Evie, do you mind if I just 0:06:25.279 --> 0:06:27.640 interrupt you briefly, because we always talk about the transition, 0:06:27.680 --> 0:06:30.200 and when we do, I think it's time we start 0:06:30.200 --> 0:06:32.800 making it clear that we're not really talking about a transition. 0:06:32.839 --> 0:06:34.040 We're talking about an addition. 0:06:34.400 --> 0:06:36.839 Correct, It's just the change of shape, And I think 0:06:36.839 --> 0:06:37.520 that's it. Yeah. 0:06:37.560 --> 0:06:40.559 Absolutely, We've never had an energy transition in history. 0:06:40.600 --> 0:06:43.520 We've only ever had an addition that we don't use 0:06:43.600 --> 0:06:45.520 less cold than we did, we don't use less wood 0:06:45.520 --> 0:06:47.920 than we did, none of those things. We just use 0:06:48.200 --> 0:06:50.400 another type of energy on top. And that's what's happening. 0:06:50.520 --> 0:06:53.920 I mean, we can't have the future that is being 0:06:53.920 --> 0:06:57.920 advertised to us so extensively without a net addition because 0:06:58.000 --> 0:07:00.240 everything that is being advertised, that data sent A and 0:07:00.279 --> 0:07:03.640 AI just use vast amounts of power and we can't 0:07:03.640 --> 0:07:05.520 solve that with fossil fuels alone. It's got to be 0:07:05.600 --> 0:07:08.760 other things. So the transition is the shape of those 0:07:08.880 --> 0:07:11.840 energy molecules in terms of where they come from, and 0:07:11.880 --> 0:07:14.200 through time, I'm sure we probably will get to a 0:07:14.240 --> 0:07:16.280 point where the shift away from fossil fuel starts to 0:07:16.320 --> 0:07:20.200 become dramatic, but that's probably quite long dated. But in 0:07:20.240 --> 0:07:23.520 that transition period, as that part is evolving and becoming 0:07:23.520 --> 0:07:26.280 a bigger component of supply, more and more metals are 0:07:26.320 --> 0:07:28.280 going to be going to be needed. And I think 0:07:28.280 --> 0:07:30.680 that's pretty obvious. So I think the demand side is 0:07:31.040 --> 0:07:34.400 very hard to argue with. I think the supply side 0:07:34.440 --> 0:07:37.320 is equally challenging, you know, we're seeing very very long 0:07:37.440 --> 0:07:41.080 dated timeframes, so the addition of new supply of industrial commodities, 0:07:41.360 --> 0:07:44.480 it's becoming harder and harder to develop these things for 0:07:44.760 --> 0:07:48.040 whether it's the environmental permitting or the regulations attached to it, 0:07:48.040 --> 0:07:52.280 the complexity where these all bodies are located. They're not 0:07:52.360 --> 0:07:55.120 kind of shining out of the ground and easy to identify. 0:07:55.200 --> 0:07:57.520 You've got to go deep underground or top of mountains, 0:07:57.760 --> 0:08:00.400 access to water and power and people, and it is 0:08:00.480 --> 0:08:02.920 just becoming more and more complex. So the thing that 0:08:02.960 --> 0:08:06.080 we see that's coming back to your question that's so 0:08:06.160 --> 0:08:11.280 fascinating is how the industry finances the growth that is 0:08:11.360 --> 0:08:15.800 needed and are the incentives or the returns there today 0:08:15.880 --> 0:08:20.120 at today's commodity prices to justify those investments. And when 0:08:20.120 --> 0:08:22.400 you look across the kind of spectrum, it's hard to 0:08:22.440 --> 0:08:25.080 see the returns for a number of the key commodities 0:08:25.440 --> 0:08:28.240 to justify that investment. So the imbalance, the kind of 0:08:28.240 --> 0:08:30.760 shock that you talk about, is probably going to come 0:08:30.840 --> 0:08:35.080 from a long dated period of under investment into supply 0:08:35.240 --> 0:08:39.800 because the returns aren't there. That coincides almost tectonically, you know, 0:08:39.880 --> 0:08:43.840 with that sudden, you know, appearance of demand that everybody identifies, 0:08:43.880 --> 0:08:47.280 and you then see a price response to reflect that imbalance, 0:08:47.760 --> 0:08:50.640 and that then triggers probably a long dated period of 0:08:50.640 --> 0:08:54.400 investment into new supply growth. In that interim period, you've 0:08:54.440 --> 0:08:57.400 got governments running around, you know, saying that they're worried 0:08:57.400 --> 0:09:00.960 about security of supply, trying to incentivize investment. You've got 0:09:01.320 --> 0:09:03.959 the US trying to unblock some of the red tape 0:09:04.000 --> 0:09:08.160 around investment of domestic resources, which might help. We don't know. 0:09:08.280 --> 0:09:10.840 It's a very very early days in that regard, but 0:09:10.920 --> 0:09:13.679 I still think that the challenges are very much going 0:09:13.679 --> 0:09:16.320 to be kind of dominating the headlines, and at some 0:09:16.400 --> 0:09:19.400 point there's going to be pressure and that hopefully will 0:09:19.520 --> 0:09:22.160 lead to improve returns for the companies that make the 0:09:22.160 --> 0:09:23.880 commodities today. 0:09:24.679 --> 0:09:26.800 Yeah, I mean, the demand side will makes sense. And 0:09:26.840 --> 0:09:29.160 I think everyone can see this. Everyone can see rising 0:09:29.200 --> 0:09:32.400 demand from the energy transition edition, whatever we're going to 0:09:32.400 --> 0:09:38.280 call it now, from everyone, from this rising concern about security, 0:09:38.400 --> 0:09:41.560 from the idea that we should massively increase our spending 0:09:41.559 --> 0:09:45.400 on defense, increase our spending on reindustrialization, et cetera, et cetera. 0:09:45.640 --> 0:09:47.560 But when it comes to the supply side, in the 0:09:47.600 --> 0:09:50.199 old days, we always used to saying that the alter 0:09:50.280 --> 0:09:52.360 to high prices is high prices, or the solution to 0:09:52.400 --> 0:09:53.839 high prices is high prices are shoot. 0:09:53.880 --> 0:09:54.920 I mean, because then you get. 0:09:54.760 --> 0:09:58.840 This massive burst of supply, but increasingly it becomes harder 0:09:58.840 --> 0:10:01.200 and harder to incre supply for all the reasons that 0:10:01.240 --> 0:10:04.160 you mentioned, but also for environmental reasons, getting permissioned to 0:10:04.200 --> 0:10:06.480 open new sites, getting permissions to explore, etc. 0:10:07.080 --> 0:10:08.520 So is it the case that. 0:10:08.520 --> 0:10:11.680 As this dynamic you've been talking about unfold, the cycle 0:10:11.760 --> 0:10:14.440 is very significantly longer than it might have been in 0:10:14.480 --> 0:10:16.559 the past. So, for example, all the big companies will 0:10:16.559 --> 0:10:18.959 now say that it's very significant did you just go 0:10:19.040 --> 0:10:21.720 out and buy someone else's sites than it is to 0:10:21.760 --> 0:10:25.040 try and find another one, explore, get permissions and get 0:10:25.080 --> 0:10:25.840 going with production. 0:10:25.880 --> 0:10:29.120 Yeah, I'd definitely agree with that latter point. The valuations 0:10:29.200 --> 0:10:33.880 on existing production today are much lower than the cost 0:10:33.920 --> 0:10:36.600 of building stuff. I mean, that's a sweeping commet but 0:10:36.600 --> 0:10:38.679 there are there's a lot of data to support that. 0:10:39.040 --> 0:10:42.080 And it's not just the cost, it's the time and 0:10:42.120 --> 0:10:45.000 complexity as you mentioned about building new stuff. So you 0:10:45.120 --> 0:10:47.760 might have a project that's ready to go, but it 0:10:47.840 --> 0:10:50.120 still takes many many years to construct. There's still a 0:10:50.160 --> 0:10:52.760 lot of risk around how much it's truly going to cost. 0:10:52.760 --> 0:10:54.559 Anyone who's built a house knows that it tends to 0:10:54.640 --> 0:10:56.920 cost more than you think at the start, And it's 0:10:56.920 --> 0:10:58.800 the same with building your mind, except the numbers that 0:10:58.880 --> 0:11:01.040 just have many more zeros. When you think about that, 0:11:01.080 --> 0:11:03.240 if you're buying an asset today that's in production, you've 0:11:03.240 --> 0:11:06.080 got many many years of cash flow from that asset 0:11:06.360 --> 0:11:08.960 before the stuff you might be building from scratch actually 0:11:08.960 --> 0:11:12.040 starts producing cash if it starts on time and at 0:11:12.040 --> 0:11:15.479 the right cost and ramps up to full production successfully. 0:11:15.600 --> 0:11:17.640 We've got a few examples recently where some of the 0:11:17.679 --> 0:11:20.560 world's biggest new copper mines have ended up costing fifty 0:11:20.600 --> 0:11:22.959 to one hundred percent more than originally planned and are 0:11:22.960 --> 0:11:26.000 still not at full capacity two or three years after 0:11:26.120 --> 0:11:30.000 having supposedly started, Whereas if you'd gone and bought somebody 0:11:30.040 --> 0:11:32.960 else's asset and paid full price for it, you would 0:11:33.000 --> 0:11:35.040 have had three or four years worth of cashlow to 0:11:35.080 --> 0:11:37.480 help reduce that cost by the time you know, the 0:11:37.520 --> 0:11:40.320 new one might have might have started. So I think 0:11:40.320 --> 0:11:43.080 the kind of on a risk reward basis, the assets 0:11:43.080 --> 0:11:45.880 in the market are trading a lot cheaper for less 0:11:46.000 --> 0:11:48.640 risk than building some things from scratch, which obviously is 0:11:49.000 --> 0:11:51.199 one of the opportunities in the market that we see. 0:11:52.000 --> 0:11:54.760 Okay, Nick, and we've talked a lot around qualities in general, 0:11:54.800 --> 0:11:57.559 about the different metals. I know you've specialized particularly in 0:11:57.640 --> 0:12:00.400 precious metals, but in the world of metals overall, the 0:12:00.480 --> 0:12:02.600 any that you look at and you find particularly interesting. 0:12:03.240 --> 0:12:04.920 We're not going to go straight to gold, by the way. 0:12:06.440 --> 0:12:08.680 No, you talked about these not to build on this, 0:12:08.800 --> 0:12:10.320 and it's sort of punnintended there. 0:12:10.320 --> 0:12:13.480 But you talk about the slow surprises, and. 0:12:13.520 --> 0:12:16.800 When you look at commodities sort of uros pla manus demand, 0:12:16.840 --> 0:12:20.040 you kind of fudge for macro equals price, and gold 0:12:20.160 --> 0:12:22.160 is it's less of a commodity out of all of them. 0:12:22.520 --> 0:12:25.040 But from my seat, basically what we're seeing is is 0:12:25.080 --> 0:12:28.400 platinum is really turning into a PGMs, turning into sort 0:12:28.400 --> 0:12:31.840 of that slow surprise we touch on again, it's your 0:12:31.960 --> 0:12:34.240 structural urrors of under investments in the sack. So a 0:12:34.280 --> 0:12:37.280 couple of months ago, fifty percent of the fifty percent 0:12:37.440 --> 0:12:41.559 of your supply was underwater, and so you get then 0:12:41.840 --> 0:12:44.640 you sort of have this sort of you know, really 0:12:44.640 --> 0:12:49.000 low pricing regime a sort of painful period, and you 0:12:49.040 --> 0:12:50.920 then get a catalyst, which happens to actually be the 0:12:50.920 --> 0:12:54.600 ball price, because Chinese jewelry demand is basically down like 0:12:54.600 --> 0:12:57.680 thirty forty percent given high ball pricing, and so you 0:12:57.760 --> 0:13:00.600 got your Chinese judas really looking at re stocking and 0:13:00.640 --> 0:13:03.920 going into platform versus gold. So that is the catalyst 0:13:03.960 --> 0:13:07.560 that has you know, seen almost forty percent three pricing 0:13:07.679 --> 0:13:10.160 in the last few weeks, which is pretty unprecedented. 0:13:10.600 --> 0:13:12.240 So yes, eyes. 0:13:11.720 --> 0:13:14.160 Are definitely on the PGM sector because again, I think 0:13:14.559 --> 0:13:17.000 that response when we talk about the supplier response and 0:13:17.000 --> 0:13:19.120 how quick that is, because when the mind does turn, 0:13:19.160 --> 0:13:22.360 it can swim pretty quickly. And in metals it's it's 0:13:22.400 --> 0:13:25.200 either scrap or it's primary. And if you just there's 0:13:25.240 --> 0:13:27.960 just no mind to bold, right there is it's just 0:13:28.000 --> 0:13:31.240 not there, and scrap for especially for PGMs, that's sitting 0:13:31.280 --> 0:13:33.360 in order cats and people are just hanging on to 0:13:33.440 --> 0:13:36.720 cars for longer because of high inflation because abound certain 0:13:36.760 --> 0:13:39.280 ty becaeuce of tariffs and that that material just isn't 0:13:39.280 --> 0:13:42.040 coming back. So we're not really seeing that the supplier 0:13:42.040 --> 0:13:46.280 responsors you generally see across the metal space industrials and 0:13:46.480 --> 0:13:48.560 precious when you get a large price free rating. 0:13:48.880 --> 0:13:50.400 Okay, well I'll tell you what I gave in and 0:13:50.440 --> 0:13:55.680 let's talk about gold. You're I mean it's empting heavy. 0:13:56.080 --> 0:13:59.079 You're your portfolio is what the thirty percent or in gold? 0:13:59.160 --> 0:14:00.319 Gold? Like please at the moment? 0:14:00.400 --> 0:14:03.160 Right, And Nikki, I know you're something of a gold bull, right, Nika, 0:14:03.160 --> 0:14:05.320 why don't need talk us through the case. 0:14:05.920 --> 0:14:08.360 I think gold sort of speaks for itself in terms 0:14:08.360 --> 0:14:10.880 of its three ratings through two thousand and it's it 0:14:10.960 --> 0:14:13.559 is putting commodities back on the map in the broader sense. 0:14:14.160 --> 0:14:18.280 It hasn't burnt itself out like every other commodity price 0:14:18.480 --> 0:14:22.360 boom or bus. So you've got investors coming back and saying, right, right, 0:14:22.480 --> 0:14:23.600 is this time really different? 0:14:23.640 --> 0:14:24.040 And why? 0:14:24.200 --> 0:14:28.880 And you've had a bunch of structural forces come together. Deglobalization, 0:14:29.000 --> 0:14:32.600 de dollarization, which didn't start now it's this started Brexit, 0:14:32.720 --> 0:14:36.480 like this started Brexit Trump one point zero, accelerated with COVID, 0:14:36.800 --> 0:14:40.880 accelerated with Ukraine war, the weaponization of dollars, and then 0:14:41.040 --> 0:14:43.120 just sort of ongoing geo political tensions. 0:14:43.160 --> 0:14:46.200 And I think you now have a world where. 0:14:46.560 --> 0:14:50.720 Yeah, there is it's it's each protectionism is up and 0:14:50.760 --> 0:14:54.800 again a course for those strategic stockpiling of and central 0:14:54.800 --> 0:14:57.720 banks that have been that key game changer, that a 0:14:57.840 --> 0:15:01.520 key demand game changer for whether it's a sub two 0:15:01.560 --> 0:15:04.400 thousand dollars acid or or now three thousand dollars plus 0:15:04.480 --> 0:15:07.840 ASCID and the way they're accumulating just too as a 0:15:07.920 --> 0:15:11.120 dollar hedge, but also fits currency hedge and inflation hedge, 0:15:11.760 --> 0:15:14.160 energy political hedge is kind of unprecedented, and we don't 0:15:14.200 --> 0:15:15.680 see that falling away anytime soon. 0:15:16.160 --> 0:15:18.520 You don't see it falling away anytime seeing the Chinese government, 0:15:18.640 --> 0:15:20.800 Chinese center back, for example, has been buying and buying 0:15:20.840 --> 0:15:23.240 and buying, and you see that continuing. 0:15:23.520 --> 0:15:26.360 Mostly Yeah, so it's mostly emerging markets, central banks, a 0:15:26.360 --> 0:15:28.720 lot of Africa and a lot of Asian obviously China. 0:15:29.000 --> 0:15:31.800 The interesting thing is, you know, World God Council do 0:15:31.840 --> 0:15:34.640 a great it's sort of great analysis and data on 0:15:34.720 --> 0:15:37.240 central bank buying, but it's it's official and a lot 0:15:37.280 --> 0:15:40.880 of it's unofficial. And in a Trump era, who you know, 0:15:40.880 --> 0:15:43.960 Trump has actively come out he had comments overnight related 0:15:43.960 --> 0:15:46.040 to the sort of the brick summits. But if you're 0:15:46.080 --> 0:15:49.240 actively seeing d dollarizing, which in the purest form is 0:15:49.240 --> 0:15:50.160 accumulating gold. 0:15:50.520 --> 0:15:52.280 The threats of tariffs sort. 0:15:52.160 --> 0:15:54.160 Of increases, So I think you're going to see a 0:15:54.240 --> 0:15:56.600 lot more It's it's going to become a lot more 0:15:56.640 --> 0:15:59.000 paid back to what we started off. From the conversation, 0:15:59.160 --> 0:16:01.360 I think central bank buying. You're going to have a 0:16:01.360 --> 0:16:05.520 lot of unofficial or just estimated central bank buying and 0:16:05.840 --> 0:16:07.200 won't go through the official channels. 0:16:07.880 --> 0:16:10.360 Okay, interesting, and is that what you see as well? 0:16:10.840 --> 0:16:15.040 I think I'm more bullish than that. You know, I 0:16:15.040 --> 0:16:16.440 agree with a lot of the comments I made, but 0:16:16.480 --> 0:16:19.200 I just think the scale is so much greater. You know, 0:16:19.240 --> 0:16:22.320 you look at the size of government balance sheets today, 0:16:22.520 --> 0:16:26.400 and I think that the education, a painful education that 0:16:26.520 --> 0:16:29.400 many people have been through about the loss of purchasing 0:16:29.480 --> 0:16:33.200 power over many, many years. Every year, you know, your 0:16:33.240 --> 0:16:35.360 paper currency buys you less than it did in the 0:16:35.760 --> 0:16:39.720 year before, and you know, cumulatively, it's very very expensive 0:16:40.400 --> 0:16:43.960 for paper assets. And I think the scale of government 0:16:44.000 --> 0:16:48.280 balance sheets now that need to be continually refinanced. People 0:16:48.320 --> 0:16:52.640 have learned a very very expensive lesson. We did the 0:16:52.720 --> 0:16:54.960 study of a year ago or so. I think the 0:16:55.360 --> 0:16:58.280 iPhone is now sixteen years old. You know, when it 0:16:58.280 --> 0:17:01.440 was launched, it was five hundred bucks iPhone. Now it's 0:17:01.480 --> 0:17:04.040 fifteen hundred bucks for an iPhone. You know, if you 0:17:04.160 --> 0:17:06.840 use gold to buy your iPhone, you need thirty four 0:17:06.880 --> 0:17:10.159 percent less gold today to buy today's iPhone than you 0:17:10.200 --> 0:17:13.160 did when it was first launched. That is the protection 0:17:13.400 --> 0:17:17.600 of purchasing power. Real assets have held value much better 0:17:17.640 --> 0:17:19.960 than paper currencies over time, and we all know that. 0:17:20.560 --> 0:17:23.639 And I think that people's people have started to become educated. 0:17:24.000 --> 0:17:27.399 Central banks have certainly become educated on this. And so 0:17:27.640 --> 0:17:30.119 my career is too long now, but you know, I 0:17:30.320 --> 0:17:32.879 when I started in the nineteen nineties, you know, everybody 0:17:32.920 --> 0:17:36.000 had an allocation to gold in an investment portfolio. In 0:17:36.040 --> 0:17:38.840 the early two thousands, that allocation was zero. Even the 0:17:38.880 --> 0:17:42.960 Swiss wealth managers had zero allocation to gold. Now it's 0:17:43.000 --> 0:17:47.119 getting back to two three percent some cases. More central 0:17:47.160 --> 0:17:49.480 banks have you know, stopped selling gold in the early 0:17:49.520 --> 0:17:52.320 two thousands, you know, having had whatever it was, four 0:17:52.400 --> 0:17:55.760 decades of net selling, you know, and they've been buying continuously, 0:17:55.800 --> 0:17:58.160 and they're buying at twice the average rate, or nearly 0:17:58.160 --> 0:18:00.800 three times the average rate over the last three to 0:18:00.840 --> 0:18:03.280 the last kind of seven or eight before that. So 0:18:03.440 --> 0:18:06.520 we're at a kind of a pivoting moment in this 0:18:06.680 --> 0:18:11.440 where gold has really re established itself as a financial asset. 0:18:11.800 --> 0:18:13.240 You make a really good point on a sort of 0:18:13.240 --> 0:18:16.960 the allocation to gold and sort of relative size I 0:18:16.960 --> 0:18:20.440 think of the gold market relative to other industries. I 0:18:20.480 --> 0:18:23.080 think is underappreciated. So yeah, it's just that idea that 0:18:23.720 --> 0:18:27.440 the gold space relative to the questioning of US treasuries, 0:18:27.520 --> 0:18:30.520 questioning of other assets is just it can't hold the 0:18:30.520 --> 0:18:34.880 amount of allocations if we simply just doubled investor allocations, 0:18:34.960 --> 0:18:37.639 or if Central anxious had to double their allocations to 0:18:37.680 --> 0:18:38.119 the sector. 0:18:38.280 --> 0:18:42.120 So what percentage of an ordinary person's portfolio should being gold? Micky, 0:18:42.200 --> 0:18:44.440 do you think we'll go can't? 0:18:44.560 --> 0:18:46.520 I mean the numbers thrown around is about one to 0:18:46.640 --> 0:18:49.960 five percent. I look at a very crude measure of 0:18:50.160 --> 0:18:53.600 just sort of known investor holdings, which is just simply 0:18:53.680 --> 0:18:57.679 ETF and your net COT numbers, and that's less than 0:18:57.720 --> 0:18:59.800 one percent as a percentage of equity. 0:18:59.800 --> 0:19:00.000 Hohold. 0:19:00.520 --> 0:19:04.520 But I do think specialists are somewhat involved. This is 0:19:04.560 --> 0:19:06.960 what makes me extremely polished. This isn't a gold rally 0:19:06.960 --> 0:19:10.359 that's firing on all cylinders. Retail's pretty sluggish, both in 0:19:10.640 --> 0:19:13.119 Europe and in the US. You've got central banks, you've 0:19:13.119 --> 0:19:15.800 got general investors, but I think it hasn't got. 0:19:15.640 --> 0:19:18.080 To that Fomo their phoonmo level weight. 0:19:18.119 --> 0:19:20.800 The new your taxicab is talking to me about hying gold, 0:19:20.880 --> 0:19:23.719 so really has been a sort of cold hearted like 0:19:23.760 --> 0:19:26.600 sort of allocation, very measured allocation to gold. 0:19:26.640 --> 0:19:32.840 I'd go more than that, So I thought you mightn't 0:19:32.880 --> 0:19:36.560 anywhere there enough. It's Oh. I think there's two components 0:19:36.560 --> 0:19:38.960 to that answer. The first one is that there are 0:19:39.000 --> 0:19:42.560 different ways to get exposure to gold, and to me, 0:19:42.720 --> 0:19:45.160 the optimum way is to have a mixture of exposure 0:19:45.160 --> 0:19:48.560 to physical and to gold producers. And so you set 0:19:48.560 --> 0:19:50.919 yourself a target where you want that exposure to be, 0:19:51.040 --> 0:19:53.000