1 00:00:13,880 --> 00:00:17,239 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,440 --> 00:00:20,159 Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg, and. 3 00:00:20,200 --> 00:00:22,920 Speaker 2: I'm Bildana Hairik, across Acid reporter with Bloomberg. 4 00:00:23,200 --> 00:00:25,200 Speaker 1: And this week on the show, we're going to talk 5 00:00:25,239 --> 00:00:28,080 Speaker 1: about one of the oldest and, let's be honest, most 6 00:00:28,160 --> 00:00:33,159 Speaker 1: often misunderstood investments, gold. What exactly is it? Is it 7 00:00:33,159 --> 00:00:36,400 Speaker 1: an inflation hedge, is it an interest rate hedge? Is 8 00:00:36,400 --> 00:00:39,199 Speaker 1: it a risk asset or is it a risk off asset. 9 00:00:39,640 --> 00:00:41,720 Speaker 1: We're going to get into it with an expert on 10 00:00:41,800 --> 00:00:45,800 Speaker 1: that shiny yellow metal. But first I have to ask 11 00:00:45,800 --> 00:00:50,559 Speaker 1: you had yet another luxurious, glorious vacation. Where'd you go? 12 00:00:51,200 --> 00:00:53,640 Speaker 2: We went to Italy? But this was my first vacation 13 00:00:53,680 --> 00:00:56,480 Speaker 2: of this entire year. Oh yeah, so you can't say 14 00:00:56,520 --> 00:00:58,520 Speaker 2: yet another that makes it sound like I'm like jet 15 00:00:58,560 --> 00:00:59,279 Speaker 2: setting all the time. 16 00:00:59,400 --> 00:01:01,840 Speaker 1: Yeah, but you have you ever had a staycation? You 17 00:01:01,880 --> 00:01:05,319 Speaker 1: were always like, yeah, doing COVID yeah, but otherwise you're 18 00:01:05,360 --> 00:01:06,960 Speaker 1: like you're you're a globe trotter. 19 00:01:07,080 --> 00:01:09,360 Speaker 2: But if you're sitting around at home, you know, like 20 00:01:09,920 --> 00:01:12,120 Speaker 2: then you get anxious and then you're like, what do 21 00:01:12,160 --> 00:01:13,520 Speaker 2: I do with myself. 22 00:01:13,840 --> 00:01:16,240 Speaker 1: Yeah, that's that's how I end up in Italy. Well, 23 00:01:16,360 --> 00:01:23,319 Speaker 1: I really enjoy a nice as the one does. 24 00:01:23,440 --> 00:01:27,399 Speaker 2: There was one day where wildfires broke out like all 25 00:01:27,440 --> 00:01:28,600 Speaker 2: over where we were in Italy. 26 00:01:29,240 --> 00:01:29,479 Speaker 3: Yeah. 27 00:01:29,640 --> 00:01:32,440 Speaker 2: I've never seen that really, like very close up. 28 00:01:32,760 --> 00:01:33,360 Speaker 1: That's scary. 29 00:01:33,520 --> 00:01:37,000 Speaker 2: I know it was an experience. Anyway, we're keeping our 30 00:01:37,040 --> 00:01:40,720 Speaker 2: guests waiting. Maybe he has thoughts about vacationing in Italy. 31 00:01:41,480 --> 00:01:45,240 Speaker 2: Find it's Joe Cavatoni. He's a market strategist and head 32 00:01:45,240 --> 00:01:49,000 Speaker 2: of America's at the World Gold Council. Joe, welcome to 33 00:01:49,000 --> 00:01:49,360 Speaker 2: the show. 34 00:01:50,200 --> 00:01:51,080 Speaker 3: Thanks for having me. 35 00:01:51,480 --> 00:01:54,160 Speaker 2: Maybe you've been to Italy recently and me and you 36 00:01:54,160 --> 00:01:56,680 Speaker 2: can be in the same group, the jet setting group. 37 00:01:57,160 --> 00:02:00,680 Speaker 4: Recently now not since COVID. I haven't been back since COVID, 38 00:02:01,280 --> 00:02:02,480 Speaker 4: but I've been there many times. 39 00:02:02,680 --> 00:02:05,720 Speaker 1: See something about your last name made me think that. 40 00:02:05,800 --> 00:02:06,280 Speaker 3: Joe. 41 00:02:06,600 --> 00:02:09,919 Speaker 4: Yeah, my suggestion is to go to the first two 42 00:02:09,919 --> 00:02:15,240 Speaker 4: weeks of December. Yeah December, no crowds, no holiday rush, 43 00:02:15,840 --> 00:02:16,840 Speaker 4: no students. 44 00:02:17,240 --> 00:02:20,919 Speaker 1: Yeah, huh, good advice. He's got gold and vacation strategy. 45 00:02:21,320 --> 00:02:23,680 Speaker 2: We want to hear more about gold, so I'm hoping 46 00:02:23,680 --> 00:02:25,480 Speaker 2: you can start out telling us about your role and 47 00:02:25,520 --> 00:02:28,079 Speaker 2: actually telling us a bit more about World Gold Council. 48 00:02:28,480 --> 00:02:32,240 Speaker 4: Got it, okay, So my role is to help people 49 00:02:32,320 --> 00:02:37,639 Speaker 4: understand what this asset is, how to consider analyzing it, 50 00:02:38,360 --> 00:02:41,560 Speaker 4: getting the data that you need to understand it, and 51 00:02:41,639 --> 00:02:45,320 Speaker 4: actually finding a place in your investment portfolio or in 52 00:02:45,360 --> 00:02:48,520 Speaker 4: your consumption life, and feeling comfortable and confident that you've 53 00:02:48,520 --> 00:02:52,000 Speaker 4: made the right decision. So we have data, insights and research, 54 00:02:52,840 --> 00:02:55,880 Speaker 4: and as an organization we are made up of the 55 00:02:55,880 --> 00:03:00,880 Speaker 4: world's largest mining members in gold. But this not profit organization, 56 00:03:00,919 --> 00:03:04,040 Speaker 4: The World Goal Council spends its time working on market 57 00:03:04,080 --> 00:03:08,520 Speaker 4: structure issues. Again adding to that market structure that insight, 58 00:03:08,639 --> 00:03:11,240 Speaker 4: research and information that we provide people, but also looking 59 00:03:11,280 --> 00:03:14,680 Speaker 4: at policies and market structure where we can actually help 60 00:03:15,200 --> 00:03:17,440 Speaker 4: evolve the market in a way to make it easier 61 00:03:17,840 --> 00:03:23,280 Speaker 4: to access, easier to understand, and most importantly trusted, because 62 00:03:23,280 --> 00:03:25,160 Speaker 4: that's the thing that people need to understand the most 63 00:03:25,200 --> 00:03:28,000 Speaker 4: about gold is what I've bought. I understand it, and 64 00:03:28,120 --> 00:03:30,600 Speaker 4: I can trust that it's what I bought, and that's 65 00:03:30,639 --> 00:03:31,440 Speaker 4: what we do well. 66 00:03:31,520 --> 00:03:31,680 Speaker 3: Joe. 67 00:03:31,720 --> 00:03:33,760 Speaker 1: You know, as I mentioned in the introduction, I feel 68 00:03:33,760 --> 00:03:38,520 Speaker 1: like the narrative, the explanation of what's driving gold prices 69 00:03:38,640 --> 00:03:41,720 Speaker 1: is kind of a moving target, So help us think 70 00:03:41,760 --> 00:03:45,000 Speaker 1: about what drives the price of gold up or down. 71 00:03:45,160 --> 00:03:48,440 Speaker 1: I mean sometimes you hear it as a risk off asset, 72 00:03:48,520 --> 00:03:52,320 Speaker 1: and you obviously see it rally on days when the markets, 73 00:03:52,360 --> 00:03:54,880 Speaker 1: the rest of the markets are in turmoil. For years, 74 00:03:54,960 --> 00:03:57,400 Speaker 1: I heard it was an inflation heade interest rate. What 75 00:03:57,480 --> 00:03:59,880 Speaker 1: are the main drivers of the price of gold. 76 00:04:00,240 --> 00:04:02,880 Speaker 4: It's where we usually start every one of the discussions 77 00:04:02,920 --> 00:04:06,920 Speaker 4: we have, particularly with institutional investors, is in this very 78 00:04:06,960 --> 00:04:11,800 Speaker 4: point we talk about gold in the context of strategic 79 00:04:12,640 --> 00:04:17,400 Speaker 4: and tactical drivers as an asset. It's very unique because 80 00:04:17,440 --> 00:04:21,560 Speaker 4: when you think about the strategic drivers of gold and 81 00:04:21,720 --> 00:04:26,160 Speaker 4: how gold is consumed worldwide, it's consumed in the consumption way, 82 00:04:26,560 --> 00:04:31,000 Speaker 4: which is through jewelry, small bars, and coins, maybe in 83 00:04:31,040 --> 00:04:34,320 Speaker 4: technology like your iPhone, where it's a component that's in there, 84 00:04:34,720 --> 00:04:39,360 Speaker 4: and those types of consumption behaviors are driven strategically through 85 00:04:39,400 --> 00:04:43,800 Speaker 4: economic expansion. Simply put, you get wealthier, you feel comfortable 86 00:04:43,800 --> 00:04:46,919 Speaker 4: about buying jewelry, or you buy more technology, and you 87 00:04:47,000 --> 00:04:51,160 Speaker 4: actually see economic expansion putting money in pockets and people 88 00:04:51,279 --> 00:04:53,960 Speaker 4: actually using that to invest in things, including gold. 89 00:04:54,360 --> 00:04:55,520 Speaker 3: The consumer side of things. 90 00:04:55,720 --> 00:04:58,240 Speaker 1: Do you list that first, because that's the primary main 91 00:04:58,320 --> 00:04:59,680 Speaker 1: driver in your opinion. 92 00:04:59,680 --> 00:05:01,440 Speaker 4: It is, But I'm going to come back around and 93 00:05:01,480 --> 00:05:04,120 Speaker 4: talk about the big markets like China and India, where 94 00:05:04,120 --> 00:05:06,600 Speaker 4: there's a bit of a mix because it is consumer, 95 00:05:07,080 --> 00:05:10,040 Speaker 4: but there's also an element of savings there. And then secondly, 96 00:05:10,040 --> 00:05:13,479 Speaker 4: you look at the investment side. So when market risk 97 00:05:13,680 --> 00:05:19,000 Speaker 4: and uncertainty develops, higher levels of volatility, confusion around what's 98 00:05:19,040 --> 00:05:21,200 Speaker 4: going to play out for the next period of time, 99 00:05:21,240 --> 00:05:24,720 Speaker 4: whether it's one month, one year, whatever the case may be, 100 00:05:24,920 --> 00:05:28,840 Speaker 4: long term, which is how we often make sure people understand. 101 00:05:29,120 --> 00:05:31,640 Speaker 4: That's how you need to view gold. The market risk 102 00:05:31,680 --> 00:05:37,000 Speaker 4: and uncertainty is benefited when gold is added to your 103 00:05:37,000 --> 00:05:41,000 Speaker 4: portfolio because in that context, investors see the type of 104 00:05:41,000 --> 00:05:44,640 Speaker 4: diversification benefit you get from gold in your portfolio helpful. 105 00:05:45,000 --> 00:05:49,200 Speaker 4: So it correlates positively when equities, for example, S and 106 00:05:49,240 --> 00:05:52,840 Speaker 4: P five hundred goes up, and it correlates negative when 107 00:05:52,880 --> 00:05:56,000 Speaker 4: the SMP goes down. Simply put, So you've got those 108 00:05:56,000 --> 00:06:00,000 Speaker 4: two strategic drivers. Adding to that, you've got a global asset, 109 00:06:00,760 --> 00:06:02,880 Speaker 4: so it's not just something bought here in the US, 110 00:06:02,920 --> 00:06:06,640 Speaker 4: but it's bought and sold in the US, Canada, Latin America, 111 00:06:06,720 --> 00:06:10,040 Speaker 4: South America, all over the world, China and India two 112 00:06:10,200 --> 00:06:14,839 Speaker 4: huge markets from a consumption perspective. And in addition to that, 113 00:06:15,640 --> 00:06:19,200 Speaker 4: this asset is actually produced and supplied on a global 114 00:06:19,240 --> 00:06:22,120 Speaker 4: scale as well. So you've got a global element, you've 115 00:06:22,120 --> 00:06:25,440 Speaker 4: got a regional element, you've got a consumer behavior, you've 116 00:06:25,440 --> 00:06:28,719 Speaker 4: got an investment behavior. And it's really kind of exciting 117 00:06:28,960 --> 00:06:31,160 Speaker 4: because you really don't know that until you start really 118 00:06:31,200 --> 00:06:32,239 Speaker 4: digging into the detail. 119 00:06:32,720 --> 00:06:33,560 Speaker 3: Now in the. 120 00:06:33,560 --> 00:06:36,680 Speaker 4: US market in particular, it can be a little frustrating 121 00:06:36,720 --> 00:06:38,960 Speaker 4: because what you tend to find with people is they 122 00:06:39,040 --> 00:06:41,839 Speaker 4: want to shout from a pit on a trading floor 123 00:06:41,960 --> 00:06:44,400 Speaker 4: about the next thirty minutes of what's going to happen 124 00:06:44,440 --> 00:06:47,360 Speaker 4: with gold and the futures, et cetera, et cetera. And 125 00:06:47,400 --> 00:06:50,680 Speaker 4: that's the tactical things that you need to understand. That's 126 00:06:50,720 --> 00:06:53,600 Speaker 4: the noise you need to tolerate when you look strategically 127 00:06:53,600 --> 00:06:57,000 Speaker 4: at it. So there you've got opportunity cost and momentum 128 00:06:57,040 --> 00:07:00,560 Speaker 4: the two driving factors there. Opportunity cost is like what 129 00:07:00,600 --> 00:07:03,280 Speaker 4: we've been seeing for the last call it nine months, 130 00:07:04,120 --> 00:07:07,000 Speaker 4: rates are moving. How should I be looking at most 131 00:07:07,080 --> 00:07:10,640 Speaker 4: opportunistic moments. Let's use a pool of liquidity that I 132 00:07:10,640 --> 00:07:13,320 Speaker 4: can get to, like gold, very liquid asset. We'll talk 133 00:07:13,360 --> 00:07:16,400 Speaker 4: about that, and then when it comes to momentum, is 134 00:07:16,440 --> 00:07:20,440 Speaker 4: something happening quick? Is something happening now? Those two factors 135 00:07:20,480 --> 00:07:21,920 Speaker 4: move gold on the short term. 136 00:07:22,120 --> 00:07:23,880 Speaker 2: So Joe, can you talk a bit about what the 137 00:07:23,880 --> 00:07:27,560 Speaker 2: price of gold has done this year? You mentioned monetary 138 00:07:27,600 --> 00:07:30,920 Speaker 2: policy for instance, like how that impacts things or even 139 00:07:31,080 --> 00:07:35,240 Speaker 2: you know we have the US credit downgrade news this week, 140 00:07:35,320 --> 00:07:37,720 Speaker 2: how might something like that impact the price of gold. 141 00:07:38,240 --> 00:07:43,280 Speaker 4: So this year what we've seen are two things. Number one, 142 00:07:44,040 --> 00:07:48,280 Speaker 4: the monetary policy, we'll bring that in now continuing to 143 00:07:48,360 --> 00:07:52,360 Speaker 4: be a headwind, the opportunity cost, the rotation of assets, 144 00:07:52,360 --> 00:07:56,280 Speaker 4: and a portfolio risk asset behavior, how people are dealing 145 00:07:56,280 --> 00:07:59,120 Speaker 4: with their risk assets. That's a moment where we see 146 00:07:59,160 --> 00:08:03,280 Speaker 4: headwinds for gold. People don't look to gold in those 147 00:08:03,320 --> 00:08:06,480 Speaker 4: moments when movement and rates and movement in those risk 148 00:08:06,480 --> 00:08:09,560 Speaker 4: assets is taking place. We often see it a headwind 149 00:08:09,560 --> 00:08:12,080 Speaker 4: for gold because it's used as a liquidity source. And 150 00:08:12,120 --> 00:08:14,480 Speaker 4: then once people have made their allocation, they come back 151 00:08:14,520 --> 00:08:17,320 Speaker 4: around to gold and they put in their portfolio of 152 00:08:17,360 --> 00:08:20,880 Speaker 4: that ballast of kind of holding three, five, ten percent 153 00:08:20,920 --> 00:08:23,800 Speaker 4: of their portfolio. So the price behavior this year has 154 00:08:23,800 --> 00:08:26,600 Speaker 4: seen a lot of that, but within the course of 155 00:08:26,640 --> 00:08:31,600 Speaker 4: the year, we've also seen systemic events or moments, events 156 00:08:31,680 --> 00:08:35,600 Speaker 4: that have kicked into place a banking crisis. For lack 157 00:08:35,640 --> 00:08:37,800 Speaker 4: of a better way of putting it, you're a Silicon 158 00:08:37,880 --> 00:08:42,000 Speaker 4: valley bank, your first republic, your credit sueze. Moments where 159 00:08:42,000 --> 00:08:44,679 Speaker 4: there's a crisis and people say, hey, look, I need 160 00:08:44,720 --> 00:08:47,480 Speaker 4: to make sure that I can preserve my asset, all 161 00:08:47,480 --> 00:08:51,280 Speaker 4: my real assets need to go up. My safe haven asset, 162 00:08:51,320 --> 00:08:53,280 Speaker 4: which is often how it's referred to, is where people 163 00:08:53,320 --> 00:08:56,240 Speaker 4: go with gold. And so we've seen these moments and 164 00:08:56,280 --> 00:08:58,840 Speaker 4: now over the course of the last three to six months, 165 00:08:58,840 --> 00:09:01,720 Speaker 4: we've had a few, but not a lot. I think 166 00:09:01,760 --> 00:09:05,480 Speaker 4: that I was expecting to potentially see Wednesday's announced cut 167 00:09:05,520 --> 00:09:08,960 Speaker 4: by Fitch in the rate for the US the long 168 00:09:09,040 --> 00:09:12,640 Speaker 4: term debt rating to potentially be a flight to quality 169 00:09:12,640 --> 00:09:15,679 Speaker 4: for gold, but it hasn't been just yet. So what 170 00:09:15,720 --> 00:09:17,480 Speaker 4: it has been is it's been something that's had a 171 00:09:17,480 --> 00:09:20,040 Speaker 4: negative impact on the price, and ultimately what that means 172 00:09:20,400 --> 00:09:22,640 Speaker 4: is we're going to start to see the price rebound 173 00:09:22,679 --> 00:09:25,079 Speaker 4: when people move away from it being a liquidity source. 174 00:09:25,480 --> 00:09:28,320 Speaker 4: So you see a gold price that right now because 175 00:09:28,360 --> 00:09:31,160 Speaker 4: of the possibility of things that are happening in the 176 00:09:31,160 --> 00:09:35,080 Speaker 4: monetary policy space. When are the rate hikes going to 177 00:09:35,120 --> 00:09:38,280 Speaker 4: stop peak and we're going to start to see the 178 00:09:38,320 --> 00:09:40,520 Speaker 4: other side of this when the fense managed to cool 179 00:09:40,520 --> 00:09:43,880 Speaker 4: off the economy. Once that starts to develop, that monetary 180 00:09:43,880 --> 00:09:47,320 Speaker 4: policy will loosen up the ability for goal to start 181 00:09:47,320 --> 00:09:49,640 Speaker 4: to see itself run. Right now, what we're seeing is 182 00:09:49,720 --> 00:09:52,000 Speaker 4: range bound pricing on the gold market. So you see 183 00:09:52,080 --> 00:09:56,319 Speaker 4: us holding firm at about a eighteen fifty nineteen hundred, 184 00:09:56,520 --> 00:10:00,280 Speaker 4: almost nineteen fifty level, but not breaking out. We had 185 00:10:00,320 --> 00:10:02,360 Speaker 4: a moment earlier in the year around that banking crisis 186 00:10:02,400 --> 00:10:05,440 Speaker 4: where we did break out. We're not really breaking out 187 00:10:05,520 --> 00:10:08,840 Speaker 4: just yet, and it's simply because most institutional investors have 188 00:10:08,960 --> 00:10:11,840 Speaker 4: not come back to the table. The range bound pricing 189 00:10:11,840 --> 00:10:15,400 Speaker 4: behavior we're getting is being held up by mainly a 190 00:10:15,400 --> 00:10:17,520 Speaker 4: lot of buying by central banks, which is a trend 191 00:10:17,559 --> 00:10:18,800 Speaker 4: we've been seeing for a long time. 192 00:10:19,040 --> 00:10:21,080 Speaker 1: Yeah, Joe, you know, it's interesting when I look at 193 00:10:21,120 --> 00:10:24,439 Speaker 1: a long term chart of the price of gold, that 194 00:10:24,480 --> 00:10:27,760 Speaker 1: two thousand dollars an ounce level is really interesting, you know, 195 00:10:27,840 --> 00:10:30,600 Speaker 1: it peaked a little bit above it for a hot 196 00:10:30,640 --> 00:10:33,880 Speaker 1: minute in twenty twenty, again in twenty twenty two, and 197 00:10:33,920 --> 00:10:35,840 Speaker 1: I think again this year. And you know, looking at 198 00:10:35,880 --> 00:10:38,560 Speaker 1: that chart, the technical analysts would call it, I guess 199 00:10:38,600 --> 00:10:41,920 Speaker 1: a triple top, you know, suggesting that two thousand level 200 00:10:42,280 --> 00:10:45,120 Speaker 1: is kind of the ceiling for gold. And I wonder 201 00:10:45,200 --> 00:10:47,640 Speaker 1: how you think about that. How important are the technicals 202 00:10:47,679 --> 00:10:50,520 Speaker 1: like that for the price of gold. Does the fact 203 00:10:50,520 --> 00:10:53,920 Speaker 1: that it keeps testing that two thousand dollars level signal 204 00:10:53,960 --> 00:10:56,560 Speaker 1: anything that maybe it'll eventually break out above it? 205 00:10:56,600 --> 00:10:56,760 Speaker 3: You know? 206 00:10:56,760 --> 00:10:59,840 Speaker 1: How important are these technicals and especially that round number 207 00:10:59,840 --> 00:11:01,000 Speaker 1: of two thousand and ounce. 208 00:11:01,920 --> 00:11:04,400 Speaker 4: I think they're important and they're not to be ignored. 209 00:11:04,920 --> 00:11:07,800 Speaker 4: And I think that where it comes into the context 210 00:11:07,840 --> 00:11:11,480 Speaker 4: with which we're speaking to our investors and central banks 211 00:11:11,480 --> 00:11:14,320 Speaker 4: and sovereign wealth funds and talk to them about it 212 00:11:14,360 --> 00:11:16,560 Speaker 4: is really to help them understand their entry point into 213 00:11:16,559 --> 00:11:20,880 Speaker 4: the gold market now that two thousand point and those 214 00:11:20,960 --> 00:11:25,040 Speaker 4: technicals they start to impact some of this other area 215 00:11:25,040 --> 00:11:28,600 Speaker 4: of demand for gold I mentioned consumers, so jewelry in 216 00:11:28,720 --> 00:11:32,439 Speaker 4: China and India. These are price sensitive businesses and price 217 00:11:32,480 --> 00:11:36,360 Speaker 4: sensitive consumers. So when you start seeing those types of 218 00:11:36,400 --> 00:11:40,240 Speaker 4: price levels developed. That's when you see those types of 219 00:11:40,240 --> 00:11:43,880 Speaker 4: consumers back away from buying. Now, if they're backing away 220 00:11:43,880 --> 00:11:46,360 Speaker 4: at a two twenty and seventy five, I think is 221 00:11:46,360 --> 00:11:49,559 Speaker 4: where we hit. They start backing away, and our investors 222 00:11:49,600 --> 00:11:52,000 Speaker 4: aren't ready to step back in. The long term investors 223 00:11:52,000 --> 00:11:54,840 Speaker 4: aren't ready to step back in. That's why you're seeing 224 00:11:54,920 --> 00:11:58,520 Speaker 4: us peek out and kind of hold off. So what 225 00:11:58,600 --> 00:12:02,319 Speaker 4: we need to see next is some sort of understanding 226 00:12:02,480 --> 00:12:04,959 Speaker 4: by the investment community that the policies that the FED 227 00:12:05,000 --> 00:12:08,840 Speaker 4: are dealing with are leading to a clearer outcome, a 228 00:12:08,880 --> 00:12:12,160 Speaker 4: clearer roadmap, and then you're going to see our expectations. 229 00:12:12,200 --> 00:12:14,440 Speaker 4: You'll see these investors come back to the table and 230 00:12:14,520 --> 00:12:17,439 Speaker 4: gold will again have that slow, steady rise in its 231 00:12:17,440 --> 00:12:19,880 Speaker 4: price point. Now you see these spikes when it comes 232 00:12:19,960 --> 00:12:24,679 Speaker 4: into play around moments events. Again, earlier in the year 233 00:12:24,679 --> 00:12:26,599 Speaker 4: we hit that over two thousand level, and it was 234 00:12:26,600 --> 00:12:29,520 Speaker 4: again around that banking crisis. You start seeing those peaks. 235 00:12:29,520 --> 00:12:31,600 Speaker 4: So it's important, but it's not the only factor to 236 00:12:31,640 --> 00:12:32,600 Speaker 4: take into consideration. 237 00:12:33,400 --> 00:12:36,640 Speaker 2: I'm interested in the idea of gold as a haven asset. 238 00:12:36,720 --> 00:12:39,360 Speaker 2: So let's say we do have some of these instances 239 00:12:39,400 --> 00:12:41,440 Speaker 2: that you were talking about that we've had this year. 240 00:12:41,760 --> 00:12:45,240 Speaker 2: Why go for gold as the haven asset versus something 241 00:12:45,320 --> 00:12:46,000 Speaker 2: like treasuries. 242 00:12:46,600 --> 00:12:49,800 Speaker 4: I think what you start to see are two factors 243 00:12:49,800 --> 00:12:53,400 Speaker 4: that are pretty significant in terms of performance. It's a 244 00:12:53,440 --> 00:12:55,120 Speaker 4: limited source asset. 245 00:12:55,000 --> 00:12:57,920 Speaker 3: So over long term performance. 246 00:12:57,720 --> 00:13:02,959 Speaker 4: You'll see that gold will act appreciate, okay, And ultimately 247 00:13:03,440 --> 00:13:07,559 Speaker 4: what you find with the asset is, second, it's very liquid. 248 00:13:08,160 --> 00:13:10,360 Speaker 4: The asset trades about one hundred and fifty billion dollars 249 00:13:10,400 --> 00:13:14,120 Speaker 4: a day. So what I'd say is those factors really 250 00:13:14,160 --> 00:13:17,720 Speaker 4: weigh in and actually make people feel comfortable and confident. 251 00:13:18,200 --> 00:13:20,880 Speaker 4: And they are not linked to anything like a credit 252 00:13:20,960 --> 00:13:25,120 Speaker 4: rating or a dollar currency or whatever the case may 253 00:13:25,120 --> 00:13:28,240 Speaker 4: be that could have another level of impact on the 254 00:13:28,280 --> 00:13:31,319 Speaker 4: overall price performance and trading activity of an asset. So 255 00:13:31,640 --> 00:13:34,760 Speaker 4: you're really looking at a unique asset that stands by 256 00:13:34,840 --> 00:13:39,439 Speaker 4: itself and ultimately, with these unique drivers for consumption, will 257 00:13:39,480 --> 00:13:42,440 Speaker 4: continue to push the price higher over time. And that's 258 00:13:42,440 --> 00:13:45,480 Speaker 4: why I think people feel comfortable and confident putting it 259 00:13:45,520 --> 00:13:49,160 Speaker 4: as a component, not the only component. Again, a component 260 00:13:49,200 --> 00:13:53,280 Speaker 4: and a portfolio. 261 00:13:57,040 --> 00:13:59,520 Speaker 1: You know, Joe, I'm curious about the supply side when 262 00:13:59,559 --> 00:14:02,120 Speaker 1: it comes to gold. You know, the world gold Council, 263 00:14:02,160 --> 00:14:04,559 Speaker 1: as you mentioned, represents a lot of the gold miners 264 00:14:04,559 --> 00:14:08,120 Speaker 1: of the world. And you know, the supply chain story 265 00:14:08,200 --> 00:14:11,160 Speaker 1: was such a big story with almost everything there for 266 00:14:11,200 --> 00:14:15,199 Speaker 1: a few years, shortage of workers, shortage of industrial equipment, 267 00:14:15,600 --> 00:14:19,440 Speaker 1: higher interest rates, everything sort of combining to cause some 268 00:14:19,600 --> 00:14:23,760 Speaker 1: major supply chain issues, you know, a whole variety of products. 269 00:14:24,240 --> 00:14:27,120 Speaker 1: Did that hit the mining the gold mining sector at all, 270 00:14:27,440 --> 00:14:30,520 Speaker 1: And how does that supply side sort of affect the 271 00:14:30,560 --> 00:14:33,960 Speaker 1: price or is it more you know, the miners are 272 00:14:33,960 --> 00:14:37,720 Speaker 1: reacting to the price rather than you know, affecting the price, 273 00:14:37,760 --> 00:14:38,400 Speaker 1: if you know what I mean. 274 00:14:39,240 --> 00:14:42,680 Speaker 4: Yeah, it's a great question. And I'd say that no industry, 275 00:14:43,240 --> 00:14:46,840 Speaker 4: at least from what I could see, was immune to 276 00:14:47,160 --> 00:14:49,280 Speaker 4: what we experienced in the early days of COVID. 277 00:14:49,960 --> 00:14:50,480 Speaker 3: As a matter of. 278 00:14:50,480 --> 00:14:55,200 Speaker 4: Fact, the piece that impacted the gold market the most 279 00:14:55,480 --> 00:14:59,800 Speaker 4: was transportation movement of assets around the globe. We are 280 00:14:59,800 --> 00:15:04,680 Speaker 4: a physical asset, and when planes were grounded or space 281 00:15:04,720 --> 00:15:08,640 Speaker 4: on planes was limited, or people were uncomfortable touching things 282 00:15:09,120 --> 00:15:10,880 Speaker 4: for lack of a better way of dealing with it. 283 00:15:11,320 --> 00:15:16,080 Speaker 4: We literally saw, for example, in the US comec's futures 284 00:15:16,160 --> 00:15:21,240 Speaker 4: prices going out of think with what the underlying gold 285 00:15:21,240 --> 00:15:24,640 Speaker 4: price was doing simply because they were trading at a premium, 286 00:15:24,640 --> 00:15:27,240 Speaker 4: simply because it could not be matched with the gold 287 00:15:27,280 --> 00:15:29,520 Speaker 4: that needed to be flown into New York, put into 288 00:15:29,520 --> 00:15:33,960 Speaker 4: the vaults and actually collapse at premium. So we saw 289 00:15:33,960 --> 00:15:37,560 Speaker 4: it there probably the most where you have an inability 290 00:15:37,600 --> 00:15:41,600 Speaker 4: for assets to move around the globe. Now, mind sits refiners. 291 00:15:41,600 --> 00:15:45,320 Speaker 4: They weren't in any way only impacted. They were all impacted. 292 00:15:45,840 --> 00:15:49,280 Speaker 4: Mind sits refiners. They were all impacted in terms of 293 00:15:49,320 --> 00:15:53,120 Speaker 4: the same way other corporations were impacted. Send employees home, 294 00:15:53,680 --> 00:15:56,240 Speaker 4: you know, figure out how to reopen, deal with the 295 00:15:56,240 --> 00:15:58,880 Speaker 4: PPP issues. All of those things came into play and 296 00:15:58,920 --> 00:16:02,240 Speaker 4: they slowly came back online. What I think was also 297 00:16:02,320 --> 00:16:06,240 Speaker 4: very challenging for us was when you've got gold sitting 298 00:16:06,280 --> 00:16:08,200 Speaker 4: in a vault, how do you get in? How can 299 00:16:08,240 --> 00:16:11,600 Speaker 4: you do your inspections? And every one of these organizations 300 00:16:11,640 --> 00:16:14,880 Speaker 4: was scrambling to make it all work efficiently. Now, more 301 00:16:14,920 --> 00:16:19,240 Speaker 4: than the constraints on the market, the safe haven nature 302 00:16:19,280 --> 00:16:22,360 Speaker 4: of gold basically saw the benefits, and that's where the 303 00:16:22,360 --> 00:16:25,760 Speaker 4: price moved. When people were concerned about risk, concerned about 304 00:16:26,120 --> 00:16:28,400 Speaker 4: what's going to happen with their portfolio, they moved into gold, 305 00:16:28,440 --> 00:16:31,240 Speaker 4: and that drove the price more than the limited amount 306 00:16:31,280 --> 00:16:34,040 Speaker 4: of supply. When the mining companies were able to get open, 307 00:16:34,120 --> 00:16:36,400 Speaker 4: the refiners were able to get open, they came back online. 308 00:16:36,560 --> 00:16:39,800 Speaker 4: Transportation came on slowly and they came back online. So 309 00:16:39,840 --> 00:16:42,640 Speaker 4: it had an impact like everywhere else. But we also 310 00:16:42,800 --> 00:16:47,560 Speaker 4: saw that price appreciation was a consequence of people having 311 00:16:47,640 --> 00:16:50,640 Speaker 4: that fear and that need for a safe haven asset. 312 00:16:50,920 --> 00:16:53,800 Speaker 2: What about on the demand side, who are the biggest 313 00:16:53,800 --> 00:16:56,760 Speaker 2: buyers of gold? I think you mentioned consumers already. I'm 314 00:16:56,760 --> 00:17:00,480 Speaker 2: also interested in the central bank aspect, like how who 315 00:17:00,520 --> 00:17:03,760 Speaker 2: which central banks and how much demand is coming from 316 00:17:03,800 --> 00:17:05,120 Speaker 2: the central bank side as well. 317 00:17:05,840 --> 00:17:09,320 Speaker 4: So far and away, the two largest markets for consumption 318 00:17:09,400 --> 00:17:11,840 Speaker 4: of gold tend to be China and India, and that 319 00:17:11,920 --> 00:17:16,240 Speaker 4: tends to be consumers that are retail oriented, mainly jewelry, 320 00:17:16,520 --> 00:17:20,480 Speaker 4: but also small bars and coins, so a real consumer 321 00:17:20,560 --> 00:17:23,800 Speaker 4: type market. It's grown out of a history and tradition 322 00:17:24,880 --> 00:17:27,919 Speaker 4: of the affinity for gold, where people may not have 323 00:17:28,000 --> 00:17:30,960 Speaker 4: had bank accounts, they may not have had access to 324 00:17:31,000 --> 00:17:34,840 Speaker 4: the securities markets, and ultimately this was a mechanism for 325 00:17:35,280 --> 00:17:37,920 Speaker 4: having something precious in terms of what they were looking 326 00:17:37,920 --> 00:17:41,200 Speaker 4: to own but also saving their money. So those are 327 00:17:41,240 --> 00:17:45,440 Speaker 4: the two markets that i'd say stand out prominently and continually, 328 00:17:45,480 --> 00:17:48,280 Speaker 4: and they've developed and evolved over the last twenty years 329 00:17:48,320 --> 00:17:51,879 Speaker 4: in a very fantastic way to even bring financial markets 330 00:17:52,240 --> 00:17:54,520 Speaker 4: and financial assets to those markets as well. So you're 331 00:17:54,520 --> 00:17:56,680 Speaker 4: seeing that more in China, but it's starting to appen 332 00:17:56,720 --> 00:18:00,919 Speaker 4: in India. On the central banking side, what we've been 333 00:18:00,920 --> 00:18:05,480 Speaker 4: seeing for let's call it thirteen years, is emerging market 334 00:18:05,560 --> 00:18:10,480 Speaker 4: central banks diversifying their reserve currency portfolios and adding gold. 335 00:18:11,119 --> 00:18:13,520 Speaker 4: What they're doing is they're moving into the asset for 336 00:18:13,600 --> 00:18:18,359 Speaker 4: the concerns around inflation, concerns around need for liquidity, looking 337 00:18:18,359 --> 00:18:22,040 Speaker 4: at how they diversify their foreign currency exposures to the 338 00:18:22,119 --> 00:18:24,960 Speaker 4: dollar and the Euro. We just recently published our annual 339 00:18:25,000 --> 00:18:28,320 Speaker 4: survey where we have over fifty five central banks that 340 00:18:28,400 --> 00:18:32,120 Speaker 4: respond to us, and most have indicated that they're looking 341 00:18:32,200 --> 00:18:34,800 Speaker 4: over the next five years to lower their reliance on 342 00:18:34,840 --> 00:18:37,080 Speaker 4: the dollar and the euro, not just the dollar, the 343 00:18:37,119 --> 00:18:40,280 Speaker 4: euro as well, and actually looking at gold and looking 344 00:18:40,280 --> 00:18:43,600 Speaker 4: to increase the overall allocations that they're making there. Again, 345 00:18:43,640 --> 00:18:47,960 Speaker 4: these are emerging market central banks mainly, and they're spread 346 00:18:47,960 --> 00:18:51,240 Speaker 4: out across the globe. It's been a really interesting trend. 347 00:18:51,680 --> 00:18:54,960 Speaker 1: One thing that's really interesting about gold as an investment 348 00:18:55,040 --> 00:18:57,800 Speaker 1: is there are a variety ways to purchase it. You know, 349 00:18:57,840 --> 00:19:01,320 Speaker 1: you can buy the GLD ETF. Many of our listeners, 350 00:19:01,359 --> 00:19:05,680 Speaker 1: I'm sure are professionals who perhaps dabble in the futures market, 351 00:19:06,040 --> 00:19:08,800 Speaker 1: that's the other way. But then there's this whole other 352 00:19:08,920 --> 00:19:13,000 Speaker 1: world of gold coins that's gotten a lot of scrutiny lately. 353 00:19:13,080 --> 00:19:15,200 Speaker 1: I'm I'm sure you know what I'm talking about quote 354 00:19:15,280 --> 00:19:19,480 Speaker 1: unquote gold IRA companies. Washington Post out a story recently 355 00:19:20,000 --> 00:19:22,720 Speaker 1: saying over the past decade, more than thirty customers in 356 00:19:22,760 --> 00:19:27,000 Speaker 1: twenty states have sued a dozen gold IRA companies. Federal 357 00:19:27,040 --> 00:19:30,520 Speaker 1: regulators have sued four companies, two in the past year alone, 358 00:19:31,080 --> 00:19:35,159 Speaker 1: claiming investors were systematically charged as much as triple the 359 00:19:35,200 --> 00:19:38,600 Speaker 1: coin's value. You know, if you're not a sophisticated investor 360 00:19:38,920 --> 00:19:42,840 Speaker 1: working at a hedge fund, trading futures, or even dabbling 361 00:19:42,840 --> 00:19:46,000 Speaker 1: in the ETF space, what do you need to know 362 00:19:46,280 --> 00:19:49,840 Speaker 1: about buying gold in some of these schemes? You know, 363 00:19:49,840 --> 00:19:53,080 Speaker 1: what's sort of the the alarm bells that go off, 364 00:19:53,440 --> 00:19:56,000 Speaker 1: And furthermore, you know, I get the sense that it's 365 00:19:56,040 --> 00:19:58,560 Speaker 1: hard to regulate these type of operations. 366 00:19:57,960 --> 00:19:59,479 Speaker 3: And that's only a regulated asset. 367 00:19:59,520 --> 00:20:02,240 Speaker 1: It's really they're not selling a regulated outset. So how 368 00:20:02,280 --> 00:20:04,959 Speaker 1: are you thinking about these type of operations and what 369 00:20:05,000 --> 00:20:06,280 Speaker 1: the listeners need to know about them. 370 00:20:06,359 --> 00:20:08,840 Speaker 2: My dad's always telling me to buy gold bars. 371 00:20:08,800 --> 00:20:11,760 Speaker 1: Buy just the big bars. Yeah, yeah, he goes big. 372 00:20:13,080 --> 00:20:15,959 Speaker 4: That's a great point. I should take him on holiday 373 00:20:15,960 --> 00:20:19,879 Speaker 4: to Italy for saying that. Let me unpack this a 374 00:20:19,880 --> 00:20:21,760 Speaker 4: little bit, because I think there's a couple of things 375 00:20:21,760 --> 00:20:24,520 Speaker 4: that are embedded in this question that people really need 376 00:20:24,520 --> 00:20:26,840 Speaker 4: to have an appreciation for. So I want everybody to 377 00:20:26,880 --> 00:20:29,720 Speaker 4: have a visual We often talk about the swimming pools, right, 378 00:20:30,440 --> 00:20:32,159 Speaker 4: like the swimming pools and all the gold in the 379 00:20:32,200 --> 00:20:34,400 Speaker 4: world gets stacked up around that whole thing. But think 380 00:20:34,440 --> 00:20:37,320 Speaker 4: about what you've seen in photographs or maybe even in 381 00:20:37,720 --> 00:20:39,639 Speaker 4: the real world when you visit them like the FED 382 00:20:39,880 --> 00:20:41,479 Speaker 4: or you go on a tour the vault and there 383 00:20:41,520 --> 00:20:45,200 Speaker 4: are large bars, the very large four hundred ounce large 384 00:20:45,240 --> 00:20:48,640 Speaker 4: bar format was what we refer to. That large bar 385 00:20:48,840 --> 00:20:52,399 Speaker 4: format is probably one of the largest markets. 386 00:20:52,000 --> 00:20:53,240 Speaker 3: For gold worldwide. 387 00:20:53,720 --> 00:20:57,680 Speaker 4: Okay, so everyone wants to just go to coins and 388 00:20:57,920 --> 00:21:00,600 Speaker 4: little bars, and they're talking about those little tiny ones 389 00:21:00,600 --> 00:21:02,919 Speaker 4: that are about the size of a of a simcard 390 00:21:03,040 --> 00:21:04,720 Speaker 4: or maybe a little bit bigger than that. I want 391 00:21:04,720 --> 00:21:07,320 Speaker 4: everybody to remember that the largest component that they need 392 00:21:07,359 --> 00:21:09,480 Speaker 4: to be understanding is that when we buy gold for 393 00:21:09,560 --> 00:21:13,000 Speaker 4: GLD for example, that's the kind of gold that we're 394 00:21:13,000 --> 00:21:16,720 Speaker 4: transacting in. That is a wholesale large bar market. There 395 00:21:16,760 --> 00:21:20,240 Speaker 4: are lots of institutional traders that are doing the work 396 00:21:20,280 --> 00:21:23,879 Speaker 4: in that market. There's big banks like JP Morgan, HSBCICBC 397 00:21:24,359 --> 00:21:26,240 Speaker 4: that are facilitating that through their role in. 398 00:21:26,240 --> 00:21:27,720 Speaker 3: The London market. 399 00:21:27,920 --> 00:21:31,440 Speaker 4: And those markets are open for large institutions to buy. 400 00:21:31,480 --> 00:21:34,440 Speaker 4: So when we hear about pensions buying like in Texas 401 00:21:34,960 --> 00:21:38,320 Speaker 4: or in Alaska and other places, these organizations are buying 402 00:21:38,400 --> 00:21:39,720 Speaker 4: those types of large bars. 403 00:21:39,920 --> 00:21:42,159 Speaker 3: That's a huge element of the gold market. 404 00:21:42,200 --> 00:21:45,280 Speaker 1: So when we say nineteen hundred and fifty dollars an ounce, 405 00:21:45,440 --> 00:21:48,560 Speaker 1: it's referring to one of those gold bars sitting in 406 00:21:48,560 --> 00:21:52,159 Speaker 1: a warehouse at the LME or somewhere like that. 407 00:21:52,160 --> 00:21:54,760 Speaker 4: That's right, it's the four hundred ounce reference to the 408 00:21:54,760 --> 00:21:59,040 Speaker 4: ounce that's primarily that level. Everything else starts to derive 409 00:21:59,080 --> 00:22:01,280 Speaker 4: its price off the back of that. A kilo bar 410 00:22:01,359 --> 00:22:03,800 Speaker 4: is about the size of an iPhone, and actually, when 411 00:22:03,840 --> 00:22:05,960 Speaker 4: you think about a kilo bar, that's what's backing a 412 00:22:05,960 --> 00:22:08,720 Speaker 4: lot of the contracts at the CMEME. That's what people 413 00:22:08,760 --> 00:22:10,879 Speaker 4: may be buying and putting in a safe or in 414 00:22:10,880 --> 00:22:14,080 Speaker 4: a safe deposit box. And those are very common too, 415 00:22:14,119 --> 00:22:16,880 Speaker 4: and they are a huge market as well. But smaller 416 00:22:16,920 --> 00:22:19,760 Speaker 4: bars tends to lead to the more higher level of 417 00:22:19,840 --> 00:22:25,240 Speaker 4: risk for fraud because they're easier access, they're easier to manipulate. 418 00:22:25,440 --> 00:22:27,119 Speaker 4: And then you get smaller bars in that and then 419 00:22:27,119 --> 00:22:29,840 Speaker 4: you get into the world of coins. Now, often what 420 00:22:29,880 --> 00:22:34,080 Speaker 4: we hear about in the US market are fraudulent activities 421 00:22:34,119 --> 00:22:37,399 Speaker 4: taking place, and most of it is around sales practices. 422 00:22:37,920 --> 00:22:40,640 Speaker 4: And this is the disappointing thing and why we are 423 00:22:40,680 --> 00:22:43,080 Speaker 4: focusing on it in terms of an initiative that we 424 00:22:43,119 --> 00:22:44,399 Speaker 4: have and I'll talk to that in a moment, but 425 00:22:44,440 --> 00:22:48,720 Speaker 4: the sales practice that talks to confusion in the investment 426 00:22:48,760 --> 00:22:51,640 Speaker 4: market around the numismatic value of a coin, something that's 427 00:22:51,680 --> 00:22:55,280 Speaker 4: highly collectible, and then a premium to that ounce price 428 00:22:55,280 --> 00:22:57,960 Speaker 4: you're talking about because of the scarcity of a coin 429 00:22:58,000 --> 00:23:03,200 Speaker 4: issuance and then just coin price. So once people start 430 00:23:03,240 --> 00:23:07,040 Speaker 4: getting confused by that, and they get pressured from high 431 00:23:07,080 --> 00:23:11,560 Speaker 4: sales pressured environments, people working the phones heavily and pushing hard. 432 00:23:12,080 --> 00:23:14,840 Speaker 4: They move quickly to sell you something at the wrong price. 433 00:23:15,680 --> 00:23:18,320 Speaker 4: And often that's what we're dealing with. Most of the time. 434 00:23:18,440 --> 00:23:21,440 Speaker 4: The value of the underlying coin isn't a problem. It's 435 00:23:21,600 --> 00:23:25,399 Speaker 4: usually that moment of sale. You're catching me at a 436 00:23:25,400 --> 00:23:27,399 Speaker 4: weak moment, or you're telling me it's too good to 437 00:23:27,440 --> 00:23:31,160 Speaker 4: be true, and I fall for it, okay. And that's 438 00:23:31,200 --> 00:23:37,600 Speaker 4: why we have our process around responsible gold investment principles 439 00:23:38,480 --> 00:23:41,679 Speaker 4: and our practices that we have on our website to 440 00:23:41,680 --> 00:23:43,840 Speaker 4: tell people, Look, if you're going to do what you're 441 00:23:43,840 --> 00:23:47,280 Speaker 4: going to do, which is by retail, please go and 442 00:23:47,400 --> 00:23:50,880 Speaker 4: check out these principles that we have. Ask the right questions. 443 00:23:50,920 --> 00:23:52,520 Speaker 4: If it says it's too good to be true, it's 444 00:23:52,560 --> 00:23:55,000 Speaker 4: probably too good to be true. And that's why we 445 00:23:55,080 --> 00:24:00,840 Speaker 4: are pushing that initiative in India, China, Germany, the US 446 00:24:01,119 --> 00:24:04,679 Speaker 4: and working with reputable firms to say, how can we 447 00:24:04,720 --> 00:24:07,520 Speaker 4: take these principles that we have, How can you work 448 00:24:07,520 --> 00:24:10,399 Speaker 4: with us to self certify against these types of principles 449 00:24:10,680 --> 00:24:12,680 Speaker 4: so we can get that message out to people because 450 00:24:12,720 --> 00:24:14,880 Speaker 4: we are dealing in a world of gold, and it's 451 00:24:14,920 --> 00:24:18,240 Speaker 4: not regulated in the US markets, and these sales firms 452 00:24:18,320 --> 00:24:21,639 Speaker 4: aren't subject to licensing to sell these coins. But what 453 00:24:21,720 --> 00:24:24,480 Speaker 4: we are subject to is trying to get to people 454 00:24:24,800 --> 00:24:27,600 Speaker 4: to understand. Look, best practices can be achieved. You don't 455 00:24:27,600 --> 00:24:29,080 Speaker 4: have to buy in a haste, and you don't have 456 00:24:29,080 --> 00:24:31,880 Speaker 4: to buy in an urgent moment. And the CFTC will 457 00:24:31,880 --> 00:24:34,480 Speaker 4: come down on people and they will use their ability 458 00:24:34,480 --> 00:24:38,320 Speaker 4: to find people and reprimand people, and they'll do that, 459 00:24:38,400 --> 00:24:40,119 Speaker 4: but they have to hear of the cases, they have 460 00:24:40,200 --> 00:24:43,720 Speaker 4: to go out and investigate, and it's a moment that's 461 00:24:43,760 --> 00:24:45,600 Speaker 4: too late in the process. So we encourage people to 462 00:24:45,600 --> 00:24:48,760 Speaker 4: slow it down, understand what you're trying to achieve, ask 463 00:24:48,840 --> 00:24:51,159 Speaker 4: the right questions, and that's what we would say to people. 464 00:24:51,520 --> 00:24:51,720 Speaker 3: Now. 465 00:24:51,800 --> 00:24:54,600 Speaker 4: Part of why the ETF has been such a success, 466 00:24:54,640 --> 00:24:57,960 Speaker 4: but remember it's only about two to three percent of 467 00:24:57,960 --> 00:24:59,920 Speaker 4: the global gold market in terms of all the ETF 468 00:25:00,160 --> 00:25:04,800 Speaker 4: worldwide assets, is that it democratized and it put an 469 00:25:04,840 --> 00:25:08,200 Speaker 4: unregulated asset into a regulated environment. So you can feel 470 00:25:08,200 --> 00:25:09,800 Speaker 4: good if you're going to buy an ETF, but you 471 00:25:09,800 --> 00:25:12,520 Speaker 4: can buy physical Just slow it down and understand what 472 00:25:12,560 --> 00:25:15,800 Speaker 4: you're doing own an ETF and you're getting price performance 473 00:25:16,119 --> 00:25:18,000 Speaker 4: and it's regulated and you shift feel good about what 474 00:25:18,080 --> 00:25:22,200 Speaker 4: you own there, or use futures and it's regulated again, 475 00:25:22,359 --> 00:25:24,280 Speaker 4: another rapper that's regulated by CFTC. 476 00:25:25,359 --> 00:25:28,800 Speaker 1: Yeah, So I was looking at the GLD the management 477 00:25:28,840 --> 00:25:30,639 Speaker 1: cost of it. I think it is forty basis points 478 00:25:30,680 --> 00:25:32,800 Speaker 1: something like that, sort of high for an ETF. But 479 00:25:32,840 --> 00:25:34,920 Speaker 1: I guess for you know, gold, there's a whole lot 480 00:25:35,040 --> 00:25:37,720 Speaker 1: more going on. You have to store it ensured and 481 00:25:37,840 --> 00:25:41,399 Speaker 1: all that. So you know, is that ETF probably you know, 482 00:25:41,440 --> 00:25:45,160 Speaker 1: for your average investor, do you think that's the most efficient, 483 00:25:45,240 --> 00:25:48,160 Speaker 1: sort of cost effective way to get exposure to gold? 484 00:25:48,760 --> 00:25:51,480 Speaker 4: The way we approach it with our clients and when 485 00:25:51,520 --> 00:25:54,040 Speaker 4: asked and by the way, the World Wal Council is 486 00:25:54,080 --> 00:25:56,720 Speaker 4: the sponsor for GLD, but we're happy to talk to 487 00:25:56,760 --> 00:25:59,879 Speaker 4: them about all the different mechanisms to own gold and 488 00:26:00,040 --> 00:26:02,960 Speaker 4: actually all different ETFs as well. What people need to 489 00:26:03,040 --> 00:26:05,600 Speaker 4: understand is how large is my position going to be, 490 00:26:06,160 --> 00:26:10,280 Speaker 4: what's my period for wanting to hold it? How often 491 00:26:10,280 --> 00:26:12,639 Speaker 4: do I think I might need to rebalance it? And 492 00:26:12,680 --> 00:26:14,959 Speaker 4: then look at each one of these instruments. So GLD 493 00:26:15,080 --> 00:26:17,679 Speaker 4: is a forty bases point product. But it is the 494 00:26:17,680 --> 00:26:21,639 Speaker 4: most liquid ETF worldwide that's physically backed by gold, and 495 00:26:21,680 --> 00:26:25,200 Speaker 4: it is the largest asset worldwide physically backed by gold 496 00:26:25,560 --> 00:26:28,640 Speaker 4: by far. But there are other alternatives that are less 497 00:26:28,640 --> 00:26:32,159 Speaker 4: expensive from a management fee perspective. But you need to 498 00:26:32,240 --> 00:26:36,240 Speaker 4: understand is the asset liquid, is it going to perform 499 00:26:36,359 --> 00:26:38,479 Speaker 4: and track the gold price like I wanted to? And 500 00:26:38,480 --> 00:26:41,560 Speaker 4: what's that management fee? So what is my total cost 501 00:26:41,560 --> 00:26:44,600 Speaker 4: of ownership calculation I'd use with every other ETF if 502 00:26:44,640 --> 00:26:47,040 Speaker 4: I'm looking at it, like the cost of commissions, the 503 00:26:47,080 --> 00:26:50,280 Speaker 4: cost of impact of trading, the management fee, and the drag. 504 00:26:50,359 --> 00:26:52,439 Speaker 4: And then this case is tracking costs as opposed to 505 00:26:52,520 --> 00:26:55,520 Speaker 4: ERIC because of the fees that go along with understanding, 506 00:26:55,840 --> 00:26:58,879 Speaker 4: you know, vaulting and custody and things along those lines. 507 00:26:59,160 --> 00:27:02,080 Speaker 4: But you know, look, gld is a perfectly acceptable instrument. 508 00:27:02,960 --> 00:27:05,480 Speaker 4: Still about a fifty to fifty split between institutional and 509 00:27:05,520 --> 00:27:08,720 Speaker 4: retail platforms that are owning it. But you've got GLDM, 510 00:27:08,800 --> 00:27:14,240 Speaker 4: You've got IAU, SGOL, bar AAAU, you know a bunch 511 00:27:14,280 --> 00:27:16,760 Speaker 4: of different assets that are out there. That's the US alone, 512 00:27:16,800 --> 00:27:18,600 Speaker 4: about eighty five instruments worldwide. 513 00:27:19,000 --> 00:27:21,960 Speaker 1: Wow, eighty five instruments world right. 514 00:27:22,440 --> 00:27:24,880 Speaker 2: I also was looking at gold. I noticed it had 515 00:27:25,000 --> 00:27:28,120 Speaker 2: outflows the last two three months or so. So I'm 516 00:27:28,160 --> 00:27:32,200 Speaker 2: curious when you do see investors actually putting money towards 517 00:27:32,200 --> 00:27:35,159 Speaker 2: something like GLD, like, what do the circumstances have to 518 00:27:35,200 --> 00:27:38,560 Speaker 2: look like? And how did it hold up when we 519 00:27:38,720 --> 00:27:43,160 Speaker 2: saw inflation? When you know, because we do talk about 520 00:27:43,160 --> 00:27:45,679 Speaker 2: gold as an inflation hedge, did it hold up as 521 00:27:45,720 --> 00:27:47,560 Speaker 2: an inflation hedge the last couple of years? 522 00:27:47,760 --> 00:27:49,879 Speaker 4: Number one attracts the gold price and it's tracked the 523 00:27:49,920 --> 00:27:54,320 Speaker 4: gold price for almost this next fall twenty twenty four 524 00:27:54,359 --> 00:27:57,080 Speaker 4: to be twenty years. So yes, it performs and tracks 525 00:27:57,080 --> 00:28:01,280 Speaker 4: the gold price, no questions asked. So operationally efficient. What's 526 00:28:01,320 --> 00:28:04,800 Speaker 4: interesting about the dynamic with GLD first asset to market 527 00:28:04,880 --> 00:28:08,160 Speaker 4: in the US, second asset to market in the world. 528 00:28:08,160 --> 00:28:12,720 Speaker 4: The first was in Australia. So when that happens in 529 00:28:12,760 --> 00:28:15,959 Speaker 4: the world of ETFs, what happened in the past with 530 00:28:16,040 --> 00:28:19,239 Speaker 4: ETFs is that you cornered the market on being that 531 00:28:19,520 --> 00:28:23,560 Speaker 4: capital markets instrument over ninety five percent, if not ninety 532 00:28:23,640 --> 00:28:27,320 Speaker 4: nine percent of the related instruments in the derivative market, 533 00:28:27,400 --> 00:28:32,120 Speaker 4: option trading and so forth is really written only on GLD. 534 00:28:32,280 --> 00:28:34,439 Speaker 4: So what you end up with our institutions that are 535 00:28:34,480 --> 00:28:37,640 Speaker 4: buying and selling in the asset itself and the institutions 536 00:28:37,680 --> 00:28:40,480 Speaker 4: that are trading in those options markets, so they're feeding 537 00:28:40,760 --> 00:28:44,760 Speaker 4: on that total overall liquidity and overall size of the fund. 538 00:28:45,360 --> 00:28:48,640 Speaker 4: But that leads to a layer of AUM that will 539 00:28:48,640 --> 00:28:51,880 Speaker 4: basically be speculating and trading. So you'll see that gold 540 00:28:52,000 --> 00:28:54,160 Speaker 4: will have a higher level of volatility in its flows 541 00:28:54,480 --> 00:28:57,400 Speaker 4: than any other instrument in the market. So to your question, 542 00:28:57,480 --> 00:28:59,800 Speaker 4: how did it hold up in inflation, what we saw 543 00:28:59,840 --> 00:29:03,120 Speaker 4: with the asset was actually flows that we're actually trading 544 00:29:03,160 --> 00:29:06,600 Speaker 4: in that range probably about ten percent of the overall AUM, 545 00:29:06,920 --> 00:29:09,920 Speaker 4: and then a hold on the part of most of 546 00:29:09,920 --> 00:29:12,440 Speaker 4: the investors. And that's what we continue to hear today 547 00:29:12,920 --> 00:29:14,880 Speaker 4: is most of the conversations are about when do I 548 00:29:14,920 --> 00:29:18,160 Speaker 4: go back in, not should I keep holding my asset? 549 00:29:18,240 --> 00:29:21,440 Speaker 4: So the asset flows out from the US have stopped 550 00:29:21,480 --> 00:29:24,280 Speaker 4: slowed and people are on hold, waiting to see when 551 00:29:24,320 --> 00:29:27,040 Speaker 4: there's the next move in Again. At that top end 552 00:29:27,080 --> 00:29:30,160 Speaker 4: where you have that AUM that's linked to trading options 553 00:29:30,240 --> 00:29:33,480 Speaker 4: and the like that's been volatile, that's when people are 554 00:29:33,480 --> 00:29:36,200 Speaker 4: trying to time the market pick the spot to sell, 555 00:29:36,280 --> 00:29:38,400 Speaker 4: to buy, to cover the shorts, et cetera. 556 00:29:53,720 --> 00:29:55,960 Speaker 1: You know, Joe the Don and I over the years 557 00:29:56,120 --> 00:30:00,120 Speaker 1: have talked to a lot of cryptocurrency officionados will all 558 00:30:00,160 --> 00:30:03,720 Speaker 1: the digital goal, digital gold, and that is always the 559 00:30:03,720 --> 00:30:07,160 Speaker 1: the sales pitch I which the listeners could see Joe's 560 00:30:07,200 --> 00:30:11,640 Speaker 1: face reacting to that, but that you know, that's among 561 00:30:11,680 --> 00:30:15,040 Speaker 1: the many sales pitches that come and go for bitcoin 562 00:30:15,160 --> 00:30:19,080 Speaker 1: and other cryptos is digital gold, you know, a safe 563 00:30:19,280 --> 00:30:24,200 Speaker 1: way to store your money, blah blah blah, Yeah, inflation edge. 564 00:30:24,240 --> 00:30:26,920 Speaker 1: I'm guessing you and your colleagues haven't lost a lot 565 00:30:26,920 --> 00:30:28,960 Speaker 1: of sleep over that, or have you? How do you 566 00:30:28,960 --> 00:30:32,360 Speaker 1: you know? Does does crypto really compete with gold for 567 00:30:32,480 --> 00:30:36,280 Speaker 1: all the same investment cases that people are attracted to 568 00:30:36,320 --> 00:30:36,680 Speaker 1: gold for. 569 00:30:37,400 --> 00:30:41,800 Speaker 4: I'm going to start by saying, the evolution of technology 570 00:30:42,760 --> 00:30:49,000 Speaker 4: is amazing. The ability to have better, faster, more comprehensive 571 00:30:49,240 --> 00:30:55,720 Speaker 4: access to database management, transparency around pricing really cool stuff. Now, 572 00:30:56,240 --> 00:31:01,520 Speaker 4: as it relates to bitcoin and gold, we've done a 573 00:31:01,520 --> 00:31:04,160 Speaker 4: lot of work to try and make sure everybody understands 574 00:31:04,600 --> 00:31:09,000 Speaker 4: that these are two different assets. They behave differently, they 575 00:31:09,040 --> 00:31:13,240 Speaker 4: actually correlate differently, and bitcoin correlates more like a tech stock, 576 00:31:13,840 --> 00:31:16,080 Speaker 4: not the kind of tech stocks that are running as 577 00:31:16,080 --> 00:31:19,720 Speaker 4: of late, either, but tech stocks in general, because, like 578 00:31:19,760 --> 00:31:21,400 Speaker 4: I said, a lot of people see the same thing 579 00:31:21,400 --> 00:31:24,400 Speaker 4: I see, which is the technology is really amazing. Now, 580 00:31:24,560 --> 00:31:27,200 Speaker 4: how will it evolve over time in the form of 581 00:31:27,240 --> 00:31:30,400 Speaker 4: a currency. I don't know, but I know that the 582 00:31:30,920 --> 00:31:35,280 Speaker 4: big challenge that they're facing in the category today is 583 00:31:35,320 --> 00:31:37,680 Speaker 4: that they tend to want to be a hammer looking 584 00:31:37,720 --> 00:31:41,160 Speaker 4: for a nail. You say inflation, I can hedge inflation. 585 00:31:41,400 --> 00:31:43,840 Speaker 4: They don't hedge inflation. When you look at the performance, 586 00:31:44,680 --> 00:31:46,840 Speaker 4: you say I need safe haven asseid, they say, I'm 587 00:31:46,880 --> 00:31:50,360 Speaker 4: safe haven acid. Then guess what they aren't. You say, 588 00:31:50,480 --> 00:31:52,320 Speaker 4: I want to, you know, use it for payments to 589 00:31:52,320 --> 00:31:53,960 Speaker 4: buy a diet coke down at the seven to eleven. 590 00:31:54,000 --> 00:31:55,680 Speaker 3: They go, yeah, you can do that too. 591 00:31:55,840 --> 00:31:59,479 Speaker 4: They want to be everything and everything for everyone without 592 00:31:59,560 --> 00:32:03,120 Speaker 4: really kind of nailing down exactly what they are, which 593 00:32:03,160 --> 00:32:06,000 Speaker 4: makes it really challenging for people to analyze the asset 594 00:32:06,040 --> 00:32:09,120 Speaker 4: the same way you can analyze gold and say, look, 595 00:32:09,120 --> 00:32:12,200 Speaker 4: central banks are buying for the following reasons. Jewelry sales 596 00:32:12,200 --> 00:32:14,640 Speaker 4: are down in China because people are locked down under 597 00:32:14,680 --> 00:32:16,720 Speaker 4: COVID so that's going to kind of keep us price 598 00:32:16,800 --> 00:32:19,960 Speaker 4: range bound. Right now, you can use these assets and 599 00:32:20,000 --> 00:32:21,960 Speaker 4: the data that we have and the information to kind 600 00:32:21,960 --> 00:32:25,120 Speaker 4: of understand, analyze and make a sensible investment in gold 601 00:32:25,360 --> 00:32:27,560 Speaker 4: and look at it and get exactly what you expect 602 00:32:27,560 --> 00:32:29,360 Speaker 4: out of a portfolio performance from it. But in the 603 00:32:29,360 --> 00:32:32,960 Speaker 4: case of bitcoin, and it is pure speculation and look 604 00:32:33,480 --> 00:32:35,600 Speaker 4: have at it. And where we've gotten to with our 605 00:32:35,640 --> 00:32:38,800 Speaker 4: dialogue with clients today, guess what we say to them, Sure, 606 00:32:38,840 --> 00:32:40,479 Speaker 4: you want to buy that risk asset. You might want 607 00:32:40,520 --> 00:32:43,280 Speaker 4: to consider a gold allocation to offset the risk that 608 00:32:43,360 --> 00:32:46,280 Speaker 4: comes with it. So buy them both, because that's over 609 00:32:46,320 --> 00:32:48,760 Speaker 4: there with your equities and your bonds and your private 610 00:32:48,760 --> 00:32:51,840 Speaker 4: equity and your risk and over here is a safe 611 00:32:51,840 --> 00:32:54,640 Speaker 4: haven asset. And it's wrong to say it's a digital 612 00:32:54,720 --> 00:32:59,160 Speaker 4: version of gold, because gold's used in technology. It's used 613 00:32:59,160 --> 00:33:02,360 Speaker 4: in medical applications, which is a small component of the 614 00:33:02,360 --> 00:33:05,000 Speaker 4: big markets that we talk about, but it's a growing component. 615 00:33:05,520 --> 00:33:08,000 Speaker 4: But it's also used like you know, it's in your iPhone, 616 00:33:08,240 --> 00:33:11,240 Speaker 4: And it's hard to kind of pinpoint exactly what bitcoin 617 00:33:11,320 --> 00:33:13,000 Speaker 4: is doing. But look, I'm not saying it's not a 618 00:33:13,040 --> 00:33:15,880 Speaker 4: good asset. It's not a right asset. I'm just simply 619 00:33:15,880 --> 00:33:19,840 Speaker 4: saying it's a wrong comparison to say gold is in 620 00:33:19,880 --> 00:33:22,400 Speaker 4: the digital form in that case. And just two other 621 00:33:22,480 --> 00:33:24,320 Speaker 4: quick points on this, because I know I'm banging on 622 00:33:24,440 --> 00:33:25,000 Speaker 4: a little bit on. 623 00:33:25,280 --> 00:33:27,200 Speaker 1: I thought I thought you'd have some thoughts on this je. 624 00:33:28,160 --> 00:33:34,320 Speaker 4: But the digital technology that we're using in the gold market, 625 00:33:34,400 --> 00:33:37,360 Speaker 4: like we're on a journey as we speak. The LBMA 626 00:33:37,440 --> 00:33:40,200 Speaker 4: and the World Gold Council are on a journey piloting 627 00:33:40,240 --> 00:33:44,160 Speaker 4: technologies to better track and trace the underlying goal that's 628 00:33:44,200 --> 00:33:45,920 Speaker 4: in the market. Our it's known as our Gold Bar 629 00:33:45,960 --> 00:33:49,120 Speaker 4: Integuity Program, and it's really cool what we're doing. We're 630 00:33:49,160 --> 00:33:50,640 Speaker 4: we're I mean, it's going to take a long time 631 00:33:50,680 --> 00:33:53,640 Speaker 4: to have this happen, but we're working with organizations that 632 00:33:53,640 --> 00:33:56,960 Speaker 4: can track and trace every bar. We're working with organizations 633 00:33:56,960 --> 00:33:59,440 Speaker 4: who can actually look at the value or or i 634 00:33:59,480 --> 00:34:03,080 Speaker 4: should say the quality, the purity, and the traceability of 635 00:34:03,120 --> 00:34:05,120 Speaker 4: all the gold all the way back to the mind sights. 636 00:34:05,720 --> 00:34:08,040 Speaker 4: I mean, that's amazing, and that's coming off the similar 637 00:34:08,120 --> 00:34:11,600 Speaker 4: types of technologies. This digital edge of technology is helping 638 00:34:11,680 --> 00:34:14,000 Speaker 4: us in all the gold market. So to just simply 639 00:34:14,000 --> 00:34:16,920 Speaker 4: say it's another it's a digital version of gold. It isn't. 640 00:34:17,360 --> 00:34:20,399 Speaker 4: It's a it's a cryptocurrency that has valuations based off 641 00:34:20,440 --> 00:34:22,960 Speaker 4: of different factors. What we're dealing with is a real 642 00:34:23,000 --> 00:34:25,520 Speaker 4: world asset that at some point in time will be 643 00:34:25,560 --> 00:34:29,480 Speaker 4: successfully tokenized, which it hasn't been today. And last, but 644 00:34:29,560 --> 00:34:32,400 Speaker 4: not least, I'd simply say, hey, everything in that space 645 00:34:32,480 --> 00:34:34,800 Speaker 4: is traceable and trade and and and the anonymity that 646 00:34:34,840 --> 00:34:36,840 Speaker 4: they claim you can get is the questionable. 647 00:34:37,400 --> 00:34:42,719 Speaker 1: Yeah. Joe Cavatoni, strategist at the World Gold Council. Joe, 648 00:34:42,760 --> 00:34:45,600 Speaker 1: I gotta admit when vill Donna said she'd book you, 649 00:34:45,640 --> 00:34:48,319 Speaker 1: I was picturing a guy with like mister t gold 650 00:34:48,400 --> 00:34:52,319 Speaker 1: chains all over, like a ring on every finger. He's 651 00:34:52,360 --> 00:34:55,879 Speaker 1: just a normal guy. But I uh, very fascinating conversation, Joe. 652 00:34:55,880 --> 00:34:58,439 Speaker 1: We really appreciate it. We can't let you go just yet. 653 00:34:58,440 --> 00:34:58,720 Speaker 3: Though. 654 00:34:59,040 --> 00:35:01,680 Speaker 1: We got a tradition here where it's time for the 655 00:35:01,719 --> 00:35:05,279 Speaker 1: craziest things we've seen in markets this week. Well, Donna, 656 00:35:05,280 --> 00:35:06,040 Speaker 1: why don't you get a start? 657 00:35:06,200 --> 00:35:08,440 Speaker 2: Okay, I was going to go with this, but I 658 00:35:08,480 --> 00:35:10,000 Speaker 2: figured you were gonna yell at me because it's not 659 00:35:10,080 --> 00:35:10,840 Speaker 2: markets related. 660 00:35:11,200 --> 00:35:13,279 Speaker 1: It's that I've never yelled at you all the. 661 00:35:13,239 --> 00:35:18,480 Speaker 2: Time, especially when we're not recording. There's that guy in 662 00:35:18,560 --> 00:35:21,680 Speaker 2: Japan who spent fourteen thousand dollars on a costume to 663 00:35:21,719 --> 00:35:24,640 Speaker 2: make himself look like a dog. Did you see it? 664 00:35:25,360 --> 00:35:25,560 Speaker 3: Yes? 665 00:35:25,880 --> 00:35:29,839 Speaker 2: Yes, there's videos everywhere. And when I saw the video 666 00:35:29,920 --> 00:35:33,160 Speaker 2: without reading the captions, I thought it was a real dog. 667 00:35:33,400 --> 00:35:35,080 Speaker 1: He thought it was real, a real dog. 668 00:35:35,239 --> 00:35:38,480 Speaker 2: Yes, I mean it looks like a real dog. 669 00:35:38,640 --> 00:35:40,560 Speaker 1: And does he walk around on all fours? Yes? 670 00:35:41,480 --> 00:35:45,160 Speaker 2: Yeah, and he like paused at the four fourteen thousand. 671 00:35:45,280 --> 00:35:46,960 Speaker 2: But it's not markets related. 672 00:35:46,600 --> 00:35:49,719 Speaker 1: So well, that's that's pretty good though. It's like, well, 673 00:35:49,719 --> 00:35:52,480 Speaker 1: there's the bears in the zoo in China that yeah, 674 00:35:52,920 --> 00:35:53,680 Speaker 1: too convinced. 675 00:35:55,000 --> 00:36:00,640 Speaker 2: I'm convinced because it wrinkled in the back on his legs. Yeah, 676 00:36:00,680 --> 00:36:03,239 Speaker 2: but I was going to go with Actually, something also 677 00:36:03,320 --> 00:36:06,759 Speaker 2: related to the ETF space, which is that we've had 678 00:36:07,120 --> 00:36:11,640 Speaker 2: a ton of filings from issuers for ether futures ETFs. 679 00:36:11,760 --> 00:36:13,319 Speaker 1: Yeah, like seven or something. 680 00:36:13,520 --> 00:36:20,040 Speaker 2: Six issuers, seven different applications so far, and it was 681 00:36:20,120 --> 00:36:22,759 Speaker 2: just in May that actually a bunch of them had 682 00:36:22,800 --> 00:36:27,920 Speaker 2: to withdraw those same applications. So something has changed, Something 683 00:36:28,080 --> 00:36:30,920 Speaker 2: is giving people the idea that and actually Joe the 684 00:36:30,960 --> 00:36:32,560 Speaker 2: reason I wanted to go with this is because you 685 00:36:32,760 --> 00:36:35,080 Speaker 2: spend time at black Rock, right, so maybe you have 686 00:36:35,160 --> 00:36:39,120 Speaker 2: thoughts about what's going on with the ETF landscape. 687 00:36:39,640 --> 00:36:42,560 Speaker 4: Well, I you hit the nail on the head in 688 00:36:42,640 --> 00:36:44,640 Speaker 4: terms of where I was going to go with my 689 00:36:44,760 --> 00:36:47,080 Speaker 4: idea for the week. I did look at that collie 690 00:36:47,080 --> 00:36:51,920 Speaker 4: and it was kind of disturbing because I was actually 691 00:36:52,480 --> 00:36:55,239 Speaker 4: I was actually slightly chat lagged, and I was looking 692 00:36:55,320 --> 00:36:58,280 Speaker 4: at it in you know, the wee hours of the morning, 693 00:36:58,280 --> 00:37:01,640 Speaker 4: and I'm like, what the world is that? And I 694 00:37:01,760 --> 00:37:03,640 Speaker 4: was like, you confuse over whether it was real or not. 695 00:37:03,840 --> 00:37:06,960 Speaker 4: But I had I had a couple of reads into it. 696 00:37:07,000 --> 00:37:10,200 Speaker 4: I realized it was a fourteen thousand dollars bizarre moment. 697 00:37:10,280 --> 00:37:12,080 Speaker 4: I'm gonna go I'm going to go back in time 698 00:37:12,680 --> 00:37:14,719 Speaker 4: to when I was at Merrill Inch and I was 699 00:37:14,719 --> 00:37:16,920 Speaker 4: a junior analyst on hedge funds and there was a 700 00:37:17,120 --> 00:37:19,000 Speaker 4: particular headsphind manager that I was like one of the 701 00:37:19,000 --> 00:37:20,640 Speaker 4: guys in the corner of the room and we were 702 00:37:20,680 --> 00:37:22,680 Speaker 4: talking this manager and he insisted on saying, I'm going 703 00:37:22,680 --> 00:37:26,200 Speaker 4: to cap out my fund at a billion dollars, and 704 00:37:26,280 --> 00:37:28,960 Speaker 4: a billion dollars is going to be all I want 705 00:37:29,000 --> 00:37:31,359 Speaker 4: to manage and I don't want any more. And it's 706 00:37:31,400 --> 00:37:34,280 Speaker 4: not because I can't run my strategy or my trades 707 00:37:34,840 --> 00:37:37,440 Speaker 4: with more than a billion dollars. I worry about what 708 00:37:37,520 --> 00:37:41,359 Speaker 4: people who are facilitating my trades around me, basically looking 709 00:37:41,360 --> 00:37:43,640 Speaker 4: at people like Merrill ech and brokers and saying, hey, 710 00:37:43,680 --> 00:37:45,719 Speaker 4: you guys are running around telling everybody what I'm doing. 711 00:37:46,160 --> 00:37:50,400 Speaker 4: And the moment my trade becomes well known everybody just 712 00:37:50,440 --> 00:37:54,360 Speaker 4: follows my lead, they collapsed the opportunity for me. And 713 00:37:54,440 --> 00:37:58,680 Speaker 4: so my idea of like, what's really warping me over 714 00:37:58,680 --> 00:38:03,040 Speaker 4: the last weeks, would say maybe even months, is that 715 00:38:03,280 --> 00:38:06,759 Speaker 4: moment of people chasing the trade with no analysis. 716 00:38:07,280 --> 00:38:08,560 Speaker 3: And I actually think. 717 00:38:08,400 --> 00:38:11,400 Speaker 4: That when I look at an organization that, over the 718 00:38:11,440 --> 00:38:13,480 Speaker 4: course of twenty four months has a one hundred and 719 00:38:13,560 --> 00:38:17,600 Speaker 4: eighty degree turn in their attitude and their behavior and 720 00:38:17,640 --> 00:38:22,000 Speaker 4: the resulting filing and the resulting market behavior at least 721 00:38:22,000 --> 00:38:25,360 Speaker 4: to a twenty six percent return, it makes me think 722 00:38:26,280 --> 00:38:28,320 Speaker 4: I'm actually happy I'm sitting at the World Gold Council 723 00:38:28,360 --> 00:38:30,640 Speaker 4: so I can go to the tell these people you 724 00:38:30,760 --> 00:38:32,960 Speaker 4: might need to look at gold in that portfolio if 725 00:38:33,000 --> 00:38:36,520 Speaker 4: you're chasing a twenty six percent return on the back 726 00:38:36,600 --> 00:38:41,439 Speaker 4: of a filing with no real change in what's going 727 00:38:41,480 --> 00:38:44,520 Speaker 4: on in the world other than the potential for some 728 00:38:45,080 --> 00:38:48,000 Speaker 4: lawsuits and cases to kind of come to light and 729 00:38:48,040 --> 00:38:49,879 Speaker 4: maybe some rulings to come down the line. I don't 730 00:38:49,880 --> 00:38:52,800 Speaker 4: think anybody has a smoking gun or a silver bullet 731 00:38:52,880 --> 00:38:55,080 Speaker 4: or whatever. The expression I should be using is that 732 00:38:55,160 --> 00:38:58,439 Speaker 4: I don't think they do. Will they get approval any 733 00:38:58,480 --> 00:39:01,359 Speaker 4: of these organizations, I don't know. But does it really 734 00:39:01,440 --> 00:39:03,840 Speaker 4: merit a twenty six percent return in an asset simply 735 00:39:03,840 --> 00:39:05,680 Speaker 4: because of a filing you mean. 736 00:39:05,560 --> 00:39:09,960 Speaker 2: For a bitcoin or a spot bitcoiny TF, for an 737 00:39:10,000 --> 00:39:14,399 Speaker 2: ether future CT. We've had so many of these filings. Yeah. 738 00:39:14,520 --> 00:39:16,120 Speaker 1: Yeah, man, the prices move. 739 00:39:16,160 --> 00:39:18,640 Speaker 4: This goes back to this point we were just talking to. 740 00:39:18,719 --> 00:39:21,680 Speaker 4: The prices move pretty substantially just on a filing. 741 00:39:21,840 --> 00:39:24,239 Speaker 1: Yeah, especially, I mean when you can just buy bitcoin, 742 00:39:25,160 --> 00:39:28,080 Speaker 1: you know, like a gold ETF. Okay, I don't want 743 00:39:28,080 --> 00:39:30,560 Speaker 1: to have to have a gold vault in my house. 744 00:39:30,640 --> 00:39:33,560 Speaker 1: I kind of see the selling point more of the 745 00:39:33,560 --> 00:39:36,840 Speaker 1: ETF wrapper for that. But well, it's interesting, Joe, So 746 00:39:36,920 --> 00:39:38,400 Speaker 1: it's an interesting way to think of it. Let me 747 00:39:38,440 --> 00:39:40,560 Speaker 1: give you my my craziest thing. I'm going to the 748 00:39:40,640 --> 00:39:44,120 Speaker 1: London real estate market, the very hot real estate market 749 00:39:44,160 --> 00:39:46,680 Speaker 1: these days. I own a lot of hostile Oh, I'm 750 00:39:46,719 --> 00:39:50,040 Speaker 1: sure you do. I'm sure you do. The New York 751 00:39:50,080 --> 00:39:53,960 Speaker 1: Times has a story the headline's great. A stairway to 752 00:39:54,120 --> 00:39:58,640 Speaker 1: nowhere sells for blank in London. I'm not going to 753 00:39:58,640 --> 00:40:01,680 Speaker 1: give you the dollar figure, obviously, because it's time for 754 00:40:01,760 --> 00:40:05,000 Speaker 1: our game show. The price is precise. So let me 755 00:40:05,000 --> 00:40:09,320 Speaker 1: tell you about this. It's a four story stairwell, metal 756 00:40:09,400 --> 00:40:15,480 Speaker 1: stairwell with like this translucent glass or plastic wrapper around it. 757 00:40:15,480 --> 00:40:19,240 Speaker 1: It was the stairwell, the exterior stairwell for story office 758 00:40:19,239 --> 00:40:23,480 Speaker 1: building that was converted to residential. Now, in the conversion process, 759 00:40:23,520 --> 00:40:27,840 Speaker 1: they cut off the access to the stairwell, so the 760 00:40:27,920 --> 00:40:31,960 Speaker 1: developer of the project ended up owning the stairwell just 761 00:40:32,000 --> 00:40:35,080 Speaker 1: by itself, just stair A stairway to nowhere? 762 00:40:35,360 --> 00:40:37,440 Speaker 2: Can you like wheel it around stories? 763 00:40:37,520 --> 00:40:41,400 Speaker 1: No, it can't be detached, and it's not it can't 764 00:40:41,400 --> 00:40:45,080 Speaker 1: be entered from the actual building. But someone bought it, 765 00:40:45,920 --> 00:40:48,520 Speaker 1: so why well, I'll tell you. 766 00:40:48,640 --> 00:40:48,920 Speaker 3: Let me. 767 00:40:49,520 --> 00:40:53,560 Speaker 1: It's a guy who co founded a firm called help Bank, 768 00:40:53,960 --> 00:40:59,280 Speaker 1: which is a company that supports budding entrepreneurs. He bought it. 769 00:40:59,400 --> 00:41:02,319 Speaker 1: Now The guy quoted in the Time story is his 770 00:41:02,440 --> 00:41:04,680 Speaker 1: chief marketing officer, which I think gives you a hint 771 00:41:04,760 --> 00:41:06,680 Speaker 1: at why they bought it. Here we are talking about it. 772 00:41:06,680 --> 00:41:09,480 Speaker 1: It was any times, I will say the crazy part 773 00:41:09,719 --> 00:41:12,040 Speaker 1: is not necessarily the price of the thing. I actually 774 00:41:12,040 --> 00:41:14,880 Speaker 1: think the price that he bought it for is personally, 775 00:41:14,920 --> 00:41:17,799 Speaker 1: I think is reach. You may think it's crazy. I 776 00:41:17,880 --> 00:41:22,840 Speaker 1: just think it's crazy that they sold a stairway to nowhere. 777 00:41:23,640 --> 00:41:27,280 Speaker 1: And this guy says, well, you know he backs startups 778 00:41:27,280 --> 00:41:30,520 Speaker 1: and entrepreneurs. He said, I'm thinking I'm going to put 779 00:41:30,560 --> 00:41:33,799 Speaker 1: a desk on each landing for a budding entrepreneur. 780 00:41:34,560 --> 00:41:36,879 Speaker 2: But is it open? Is it like outdoors? 781 00:41:37,280 --> 00:41:40,239 Speaker 1: No, it's it's enclosed. It's enclosed. I don't know if 782 00:41:40,239 --> 00:41:42,640 Speaker 1: there's power or heat or anything like that. I my 783 00:41:42,719 --> 00:41:44,640 Speaker 1: guess is not. But maybe they could wire that up 784 00:41:44,680 --> 00:41:45,600 Speaker 1: our bathroom. 785 00:41:45,800 --> 00:41:47,880 Speaker 3: And he said the fourth Floyd, do I have to 786 00:41:47,880 --> 00:41:48,839 Speaker 3: go through three other? 787 00:41:51,560 --> 00:41:54,400 Speaker 1: You got to pass three other future billionaire? Startup? 788 00:41:54,719 --> 00:41:58,920 Speaker 5: Isn't in a nice location the London neighborhood of Twickenham. 789 00:41:59,040 --> 00:42:01,040 Speaker 5: I don't know much about that part of London. It 790 00:42:01,120 --> 00:42:04,520 Speaker 5: sounds sounds very nice, Southwest London. It's home to England's 791 00:42:04,600 --> 00:42:05,800 Speaker 5: National Rugby Stadium. 792 00:42:06,080 --> 00:42:07,520 Speaker 3: That's where twicking in the stadium is. 793 00:42:07,719 --> 00:42:12,400 Speaker 1: Yeah, yeah, so, and they're saying he might apply, you 794 00:42:12,400 --> 00:42:15,520 Speaker 1: know whatever the London equivalent of zoning is wherever they 795 00:42:15,560 --> 00:42:18,439 Speaker 1: call it that over there, to allow them to put 796 00:42:18,440 --> 00:42:20,000 Speaker 1: beds in there and make it residential. 797 00:42:20,080 --> 00:42:21,640 Speaker 2: So how big is this thing? 798 00:42:22,080 --> 00:42:23,880 Speaker 1: It's not that big. Now you would have like a 799 00:42:23,880 --> 00:42:26,279 Speaker 1: single bed on the landing of a stairwell or in 800 00:42:26,320 --> 00:42:30,479 Speaker 1: a desk you could turn into an airbnb. Yeah, I have. 801 00:42:30,400 --> 00:42:32,239 Speaker 4: A price in mind, me too, and I think you 802 00:42:32,280 --> 00:42:34,040 Speaker 4: could also kind of use it on the out and 803 00:42:34,120 --> 00:42:35,480 Speaker 4: the exterior for advertising. 804 00:42:36,000 --> 00:42:38,319 Speaker 1: No they're talking about that. Yep, that was another thing 805 00:42:38,360 --> 00:42:43,439 Speaker 1: to imagine they're going to talk to But it's yeah, 806 00:42:43,560 --> 00:42:44,400 Speaker 1: that kind of cloudy. 807 00:42:44,640 --> 00:42:45,600 Speaker 2: How can you have a bed? 808 00:42:46,000 --> 00:42:49,080 Speaker 1: I guess you'd get some curtains, But price is precise. 809 00:42:49,239 --> 00:42:53,480 Speaker 1: What's your bid filled on at nineteen pounds nineteen thousand pounds? 810 00:42:53,880 --> 00:42:55,800 Speaker 1: Remember prices right, rules are in effect. 811 00:42:56,040 --> 00:42:57,640 Speaker 4: I'm going to say it was a lot more expensive 812 00:42:57,680 --> 00:42:59,480 Speaker 4: than that. And the reason I think it's a lot 813 00:42:59,520 --> 00:43:02,480 Speaker 4: more expensive than that is I think that they marketing 814 00:43:02,520 --> 00:43:05,600 Speaker 4: person has probably gotten in and overpaid for it. And 815 00:43:05,600 --> 00:43:08,319 Speaker 4: I'm going to say, a million sterling, a million shurty, Oh, 816 00:43:08,719 --> 00:43:09,600 Speaker 4: a million sterling. 817 00:43:09,960 --> 00:43:13,319 Speaker 2: It can't be that high because Mike thinks it's reasonable. 818 00:43:14,000 --> 00:43:17,880 Speaker 1: I did think it was reasonably priced. Twenty five thousand pounds, wow, 819 00:43:18,160 --> 00:43:22,880 Speaker 1: thirty two thousand dollars. It's only about twelve ounces of gold, right, No, 820 00:43:23,440 --> 00:43:24,839 Speaker 1: fifteen ounces of gold. 821 00:43:24,880 --> 00:43:27,200 Speaker 3: Not a lot. See, who would have thought I was 822 00:43:27,239 --> 00:43:28,400 Speaker 3: way off the value? 823 00:43:28,800 --> 00:43:31,359 Speaker 1: But I do think it was underpriced. I think they 824 00:43:31,360 --> 00:43:32,920 Speaker 1: got a deal. I don't know if i'd go as 825 00:43:33,160 --> 00:43:37,799 Speaker 1: a million sterling. Yeah, very good anyway. Joe Caviatoni of 826 00:43:37,840 --> 00:43:41,399 Speaker 1: the World Gold Council. Really fascinating conversation, Joe, and it's 827 00:43:41,440 --> 00:43:45,600 Speaker 1: great to hear sort of a level headed explanation of 828 00:43:45,680 --> 00:43:48,520 Speaker 1: the gold market for those who sort of already in 829 00:43:48,600 --> 00:43:50,759 Speaker 1: the weeds of it. And we really appreciate your time. 830 00:43:51,040 --> 00:44:00,239 Speaker 3: Thank you for your time as well. 831 00:44:00,600 --> 00:44:03,640 Speaker 2: What goes up. We'll be back next week. Until then, 832 00:44:03,719 --> 00:44:06,640 Speaker 2: you can find us on the Bloomberg Terminal website and app, 833 00:44:07,200 --> 00:44:10,239 Speaker 2: or wherever you get your podcasts. We'd love it if 834 00:44:10,239 --> 00:44:12,279 Speaker 2: you took the time to rate and review the show 835 00:44:12,400 --> 00:44:15,200 Speaker 2: so more listeners can find us. You can find us 836 00:44:15,280 --> 00:44:19,960 Speaker 2: on Twitter, follow me at Waldona Hirich. Mike Reagan is 837 00:44:20,000 --> 00:44:24,839 Speaker 2: at Reaganonymous. You can also follow Bloomberg Podcasts at podcasts. 838 00:44:25,640 --> 00:44:28,400 Speaker 2: What Goes Up is produced by Stacy Wong and our 839 00:44:28,400 --> 00:44:31,759 Speaker 2: head of podcast is Stage Bauman. Thanks for listening, We'll 840 00:44:31,800 --> 00:44:35,600 Speaker 2: see you next week.