WEBVTT - What You Need to Know About Gold 0:00:13.880 --> 0:00:17.239 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.440 --> 0:00:20.159 My name is Mike Reagan. I'm a senior editor at Bloomberg, and. 0:00:20.200 --> 0:00:22.920 I'm Bildana Hairik, across Acid reporter with Bloomberg. 0:00:23.200 --> 0:00:25.200 And this week on the show, we're going to talk 0:00:25.239 --> 0:00:28.080 about one of the oldest and, let's be honest, most 0:00:28.160 --> 0:00:33.159 often misunderstood investments, gold. What exactly is it? Is it 0:00:33.159 --> 0:00:36.400 an inflation hedge, is it an interest rate hedge? Is 0:00:36.400 --> 0:00:39.199 it a risk asset or is it a risk off asset. 0:00:39.640 --> 0:00:41.720 We're going to get into it with an expert on 0:00:41.800 --> 0:00:45.800 that shiny yellow metal. But first I have to ask 0:00:45.800 --> 0:00:50.559 you had yet another luxurious, glorious vacation. Where'd you go? 0:00:51.200 --> 0:00:53.640 We went to Italy? But this was my first vacation 0:00:53.680 --> 0:00:56.480 of this entire year. Oh yeah, so you can't say 0:00:56.520 --> 0:00:58.520 yet another that makes it sound like I'm like jet 0:00:58.560 --> 0:00:59.279 setting all the time. 0:00:59.400 --> 0:01:01.840 Yeah, but you have you ever had a staycation? You 0:01:01.880 --> 0:01:05.319 were always like, yeah, doing COVID yeah, but otherwise you're 0:01:05.360 --> 0:01:06.960 like you're you're a globe trotter. 0:01:07.080 --> 0:01:09.360 But if you're sitting around at home, you know, like 0:01:09.920 --> 0:01:12.120 then you get anxious and then you're like, what do 0:01:12.160 --> 0:01:13.520 I do with myself. 0:01:13.840 --> 0:01:16.240 Yeah, that's that's how I end up in Italy. Well, 0:01:16.360 --> 0:01:23.319 I really enjoy a nice as the one does. 0:01:23.440 --> 0:01:27.399 There was one day where wildfires broke out like all 0:01:27.440 --> 0:01:28.600 over where we were in Italy. 0:01:29.240 --> 0:01:29.479 Yeah. 0:01:29.640 --> 0:01:32.440 I've never seen that really, like very close up. 0:01:32.760 --> 0:01:33.360 That's scary. 0:01:33.520 --> 0:01:37.000 I know it was an experience. Anyway, we're keeping our 0:01:37.040 --> 0:01:40.720 guests waiting. Maybe he has thoughts about vacationing in Italy. 0:01:41.480 --> 0:01:45.240 Find it's Joe Cavatoni. He's a market strategist and head 0:01:45.240 --> 0:01:49.000 of America's at the World Gold Council. Joe, welcome to 0:01:49.000 --> 0:01:49.360 the show. 0:01:50.200 --> 0:01:51.080 Thanks for having me. 0:01:51.480 --> 0:01:54.160 Maybe you've been to Italy recently and me and you 0:01:54.160 --> 0:01:56.680 can be in the same group, the jet setting group. 0:01:57.160 --> 0:02:00.680 Recently now not since COVID. I haven't been back since COVID, 0:02:01.280 --> 0:02:02.480 but I've been there many times. 0:02:02.680 --> 0:02:05.720 See something about your last name made me think that. 0:02:05.800 --> 0:02:06.280 Joe. 0:02:06.600 --> 0:02:09.919 Yeah, my suggestion is to go to the first two 0:02:09.919 --> 0:02:15.240 weeks of December. Yeah December, no crowds, no holiday rush, 0:02:15.840 --> 0:02:16.840 no students. 0:02:17.240 --> 0:02:20.919 Yeah, huh, good advice. He's got gold and vacation strategy. 0:02:21.320 --> 0:02:23.680 We want to hear more about gold, so I'm hoping 0:02:23.680 --> 0:02:25.480 you can start out telling us about your role and 0:02:25.520 --> 0:02:28.079 actually telling us a bit more about World Gold Council. 0:02:28.480 --> 0:02:32.240 Got it, okay, So my role is to help people 0:02:32.320 --> 0:02:37.639 understand what this asset is, how to consider analyzing it, 0:02:38.360 --> 0:02:41.560 getting the data that you need to understand it, and 0:02:41.639 --> 0:02:45.320 actually finding a place in your investment portfolio or in 0:02:45.360 --> 0:02:48.520 your consumption life, and feeling comfortable and confident that you've 0:02:48.520 --> 0:02:52.000 made the right decision. So we have data, insights and research, 0:02:52.840 --> 0:02:55.880 and as an organization we are made up of the 0:02:55.880 --> 0:03:00.880 world's largest mining members in gold. But this not profit organization, 0:03:00.919 --> 0:03:04.040 The World Goal Council spends its time working on market 0:03:04.080 --> 0:03:08.520 structure issues. Again adding to that market structure that insight, 0:03:08.639 --> 0:03:11.240 research and information that we provide people, but also looking 0:03:11.280 --> 0:03:14.680 at policies and market structure where we can actually help 0:03:15.200 --> 0:03:17.440 evolve the market in a way to make it easier 0:03:17.840 --> 0:03:23.280 to access, easier to understand, and most importantly trusted, because 0:03:23.280 --> 0:03:25.160 that's the thing that people need to understand the most 0:03:25.200 --> 0:03:28.000 about gold is what I've bought. I understand it, and 0:03:28.120 --> 0:03:30.600 I can trust that it's what I bought, and that's 0:03:30.639 --> 0:03:31.440 what we do well. 0:03:31.520 --> 0:03:31.680 Joe. 0:03:31.720 --> 0:03:33.760 You know, as I mentioned in the introduction, I feel 0:03:33.760 --> 0:03:38.520 like the narrative, the explanation of what's driving gold prices 0:03:38.640 --> 0:03:41.720 is kind of a moving target, So help us think 0:03:41.760 --> 0:03:45.000 about what drives the price of gold up or down. 0:03:45.160 --> 0:03:48.440 I mean sometimes you hear it as a risk off asset, 0:03:48.520 --> 0:03:52.320 and you obviously see it rally on days when the markets, 0:03:52.360 --> 0:03:54.880 the rest of the markets are in turmoil. For years, 0:03:54.960 --> 0:03:57.400 I heard it was an inflation heade interest rate. What 0:03:57.480 --> 0:03:59.880 are the main drivers of the price of gold. 0:04:00.240 --> 0:04:02.880 It's where we usually start every one of the discussions 0:04:02.920 --> 0:04:06.920 we have, particularly with institutional investors, is in this very 0:04:06.960 --> 0:04:11.800 point we talk about gold in the context of strategic 0:04:12.640 --> 0:04:17.400 and tactical drivers as an asset. It's very unique because 0:04:17.440 --> 0:04:21.560 when you think about the strategic drivers of gold and 0:04:21.720 --> 0:04:26.160 how gold is consumed worldwide, it's consumed in the consumption way, 0:04:26.560 --> 0:04:31.000 which is through jewelry, small bars, and coins, maybe in 0:04:31.040 --> 0:04:34.320 technology like your iPhone, where it's a component that's in there, 0:04:34.720 --> 0:04:39.360 and those types of consumption behaviors are driven strategically through 0:04:39.400 --> 0:04:43.800 economic expansion. Simply put, you get wealthier, you feel comfortable 0:04:43.800 --> 0:04:46.919 about buying jewelry, or you buy more technology, and you 0:04:47.000 --> 0:04:51.160 actually see economic expansion putting money in pockets and people 0:04:51.279 --> 0:04:53.960 actually using that to invest in things, including gold. 0:04:54.360 --> 0:04:55.520 The consumer side of things. 0:04:55.720 --> 0:04:58.240 Do you list that first, because that's the primary main 0:04:58.320 --> 0:04:59.680 driver in your opinion. 0:04:59.680 --> 0:05:01.440 It is, But I'm going to come back around and 0:05:01.480 --> 0:05:04.120 talk about the big markets like China and India, where 0:05:04.120 --> 0:05:06.600 there's a bit of a mix because it is consumer, 0:05:07.080 --> 0:05:10.040 but there's also an element of savings there. And then secondly, 0:05:10.040 --> 0:05:13.479 you look at the investment side. So when market risk 0:05:13.680 --> 0:05:19.000 and uncertainty develops, higher levels of volatility, confusion around what's 0:05:19.040 --> 0:05:21.200 going to play out for the next period of time, 0:05:21.240 --> 0:05:24.720 whether it's one month, one year, whatever the case may be, 0:05:24.920 --> 0:05:28.840 long term, which is how we often make sure people understand. 0:05:29.120 --> 0:05:31.640 That's how you need to view gold. The market risk 0:05:31.680 --> 0:05:37.000 and uncertainty is benefited when gold is added to your 0:05:37.000 --> 0:05:41.000 portfolio because in that context, investors see the type of 0:05:41.000 --> 0:05:44.640 diversification benefit you get from gold in your portfolio helpful. 0:05:45.000 --> 0:05:49.200 So it correlates positively when equities, for example, S and 0:05:49.240 --> 0:05:52.840 P five hundred goes up, and it correlates negative when 0:05:52.880 --> 0:05:56.000 the SMP goes down. Simply put, So you've got those 0:05:56.000 --> 0:06:00.000 two strategic drivers. Adding to that, you've got a global asset, 0:06:00.760 --> 0:06:02.880 so it's not just something bought here in the US, 0:06:02.920 --> 0:06:06.640 but it's bought and sold in the US, Canada, Latin America, 0:06:06.720 --> 0:06:10.040 South America, all over the world, China and India two 0:06:10.200 --> 0:06:14.839 huge markets from a consumption perspective. And in addition to that, 0:06:15.640 --> 0:06:19.200 this asset is actually produced and supplied on a global 0:06:19.240 --> 0:06:22.120 scale as well. So you've got a global element, you've 0:06:22.120 --> 0:06:25.440 got a regional element, you've got a consumer behavior, you've 0:06:25.440 --> 0:06:28.719 got an investment behavior. And it's really kind of exciting 0:06:28.960 --> 0:06:31.160 because you really don't know that until you start really 0:06:31.200 --> 0:06:32.239 digging into the detail. 0:06:32.720 --> 0:06:33.560 Now in the. 0:06:33.560 --> 0:06:36.680 US market in particular, it can be a little frustrating 0:06:36.720 --> 0:06:38.960 because what you tend to find with people is they 0:06:39.040 --> 0:06:41.839 want to shout from a pit on a trading floor 0:06:41.960 --> 0:06:44.400 about the next thirty minutes of what's going to happen 0:06:44.440 --> 0:06:47.360 with gold and the futures, et cetera, et cetera. And 0:06:47.400 --> 0:06:50.680 that's the tactical things that you need to understand. That's 0:06:50.720 --> 0:06:53.600 the noise you need to tolerate when you look strategically 0:06:53.600 --> 0:06:57.000 at it. So there you've got opportunity cost and momentum 0:06:57.040 --> 0:07:00.560 the two driving factors there. Opportunity cost is like what 0:07:00.600 --> 0:07:03.280 we've been seeing for the last call it nine months, 0:07:04.120 --> 0:07:07.000 rates are moving. How should I be looking at most 0:07:07.080 --> 0:07:10.640 opportunistic moments. Let's use a pool of liquidity that I 0:07:10.640 --> 0:07:13.320 can get to, like gold, very liquid asset. We'll talk 0:07:13.360 --> 0:07:16.400 about that, and then when it comes to momentum, is 0:07:16.440 --> 0:07:20.440 something happening quick? Is something happening now? Those two factors 0:07:20.480 --> 0:07:21.920 move gold on the short term. 0:07:22.120 --> 0:07:23.880 So Joe, can you talk a bit about what the 0:07:23.880 --> 0:07:27.560 price of gold has done this year? You mentioned monetary 0:07:27.600 --> 0:07:30.920 policy for instance, like how that impacts things or even 0:07:31.080 --> 0:07:35.240 you know we have the US credit downgrade news this week, 0:07:35.320 --> 0:07:37.720 how might something like that impact the price of gold. 0:07:38.240 --> 0:07:43.280 So this year what we've seen are two things. Number one, 0:07:44.040 --> 0:07:48.280 the monetary policy, we'll bring that in now continuing to 0:07:48.360 --> 0:07:52.360 be a headwind, the opportunity cost, the rotation of assets, 0:07:52.360 --> 0:07:56.280 and a portfolio risk asset behavior, how people are dealing 0:07:56.280 --> 0:07:59.120 with their risk assets. That's a moment where we see 0:07:59.160 --> 0:08:03.280 headwinds for gold. People don't look to gold in those 0:08:03.320 --> 0:08:06.480 moments when movement and rates and movement in those risk 0:08:06.480 --> 0:08:09.560 assets is taking place. We often see it a headwind 0:08:09.560 --> 0:08:12.080 for gold because it's used as a liquidity source. And 0:08:12.120 --> 0:08:14.480 then once people have made their allocation, they come back 0:08:14.520 --> 0:08:17.320 around to gold and they put in their portfolio of 0:08:17.360 --> 0:08:20.880 that ballast of kind of holding three, five, ten percent 0:08:20.920 --> 0:08:23.800 of their portfolio. So the price behavior this year has 0:08:23.800 --> 0:08:26.600 seen a lot of that, but within the course of 0:08:26.640 --> 0:08:31.600 the year, we've also seen systemic events or moments, events 0:08:31.680 --> 0:08:35.600 that have kicked into place a banking crisis. For lack 0:08:35.640 --> 0:08:37.800 of a better way of putting it, you're a Silicon 0:08:37.880 --> 0:08:42.000 valley bank, your first republic, your credit sueze. Moments where 0:08:42.000 --> 0:08:44.679 there's a crisis and people say, hey, look, I need 0:08:44.720 --> 0:08:47.480 to make sure that I can preserve my asset, all 0:08:47.480 --> 0:08:51.280 my real assets need to go up. My safe haven asset, 0:08:51.320 --> 0:08:53.280 which is often how it's referred to, is where people 0:08:53.320 --> 0:08:56.240 go with gold. And so we've seen these moments and 0:08:56.280 --> 0:08:58.840 now over the course of the last three to six months, 0:08:58.840 --> 0:09:01.720 we've had a few, but not a lot. I think 0:09:01.760 --> 0:09:05.480 that I was expecting to potentially see Wednesday's announced cut 0:09:05.520 --> 0:09:08.960 by Fitch in the rate for the US the long 0:09:09.040 --> 0:09:12.640 term debt rating to potentially be a flight to quality 0:09:12.640 --> 0:09:15.679 for gold, but it hasn't been just yet. So what 0:09:15.720 --> 0:09:17.480 it has been is it's been something that's had a 0:09:17.480 --> 0:09:20.040 negative impact on the price, and ultimately what that means 0:09:20.400 --> 0:09:22.640 is we're going to start to see the price rebound 0:09:22.679 --> 0:09:25.079 when people move away from it being a liquidity source. 0:09:25.480 --> 0:09:28.320 So you see a gold price that right now because 0:09:28.360 --> 0:09:31.160 of the possibility of things that are happening in the 0:09:31.160 --> 0:09:35.080 monetary policy space. When are the rate hikes going to 0:09:35.120 --> 0:09:38.280 stop peak and we're going to start to see the 0:09:38.320 --> 0:09:40.520 other side of this when the fense managed to cool 0:09:40.520 --> 0:09:43.880 off the economy. Once that starts to develop, that monetary 0:09:43.880 --> 0:09:47.320 policy will loosen up the ability for goal to start 0:09:47.320 --> 0:09:49.640 to see itself run. Right now, what we're seeing is 0:09:49.720 --> 0:09:52.000 range bound pricing on the gold market. So you see 0:09:52.080 --> 0:09:56.319 us holding firm at about a eighteen fifty nineteen hundred, 0:09:56.520 --> 0:10:00.280 almost nineteen fifty level, but not breaking out. We had 0:10:00.320 --> 0:10:02.360 a moment earlier in the year around that banking crisis 0:10:02.400 --> 0:10:05.440 where we did break out. We're not really breaking out 0:10:05.520 --> 0:10:08.840 just yet, and it's simply because most institutional investors have 0:10:08.960 --> 0:10:11.840 not come back to the table. The range bound pricing 0:10:11.840 --> 0:10:15.400 behavior we're getting is being held up by mainly a 0:10:15.400 --> 0:10:17.520 lot of buying by central banks, which is a trend 0:10:17.559 --> 0:10:18.800 we've been seeing for a long time. 0:10:19.040 --> 0:10:21.080 Yeah, Joe, you know, it's interesting when I look at 0:10:21.120 --> 0:10:24.439 a long term chart of the price of gold, that 0:10:24.480 --> 0:10:27.760 two thousand dollars an ounce level is really interesting, you know, 0:10:27.840 --> 0:10:30.600 it peaked a little bit above it for a hot 0:10:30.640 --> 0:10:33.880 minute in twenty twenty, again in twenty twenty two, and 0:10:33.920 --> 0:10:35.840 I think again this year. And you know, looking at 0:10:35.880 --> 0:10:38.560 that chart, the technical analysts would call it, I guess 0:10:38.600 --> 0:10:41.920 a triple top, you know, suggesting that two thousand level 0:10:42.280 --> 0:10:45.120 is kind of the ceiling for gold. And I wonder 0:10:45.200 --> 0:10:47.640 how you think about that. How important are the technicals 0:10:47.679 --> 0:10:50.520 like that for the price of gold. Does the fact 0:10:50.520 --> 0:10:53.920 that it keeps testing that two thousand dollars level signal 0:10:53.960 --> 0:10:56.560 anything that maybe it'll eventually break out above it? 0:10:56.600 --> 0:10:56.760 You know? 0:10:56.760 --> 0:10:59.840 How important are these technicals and especially that round number 0:10:59.840 --> 0:11:01.000 of two thousand and ounce. 0:11:01.920 --> 0:11:04.400 I think they're important and they're not to be ignored. 0:11:04.920 --> 0:11:07.800 And I think that where it comes into the context 0:11:07.840 --> 0:11:11.480 with which we're speaking to our investors and central banks 0:11:11.480 --> 0:11:14.320 and sovereign wealth funds and talk to them about it 0:11:14.360 --> 0:11:16.560 is really to help them understand their entry point into 0:11:16.559 --> 0:11:20.880 the gold market now that two thousand point and those 0:11:20.960 --> 0:11:25.040 technicals they start to impact some of this other area 0:11:25.040 --> 0:11:28.600 of demand for gold I mentioned consumers, so jewelry in 0:11:28.720 --> 0:11:32.439 China and India. These are price sensitive businesses and price 0:11:32.480 --> 0:11:36.360 sensitive consumers. So when you start seeing those types of 0:11:36.400 --> 0:11:40.240 price levels developed. That's when you see those types of 0:11:40.240 --> 0:11:43.880 consumers back away from buying. Now, if they're backing away 0:11:43.880 --> 0:11:46.360 at a two twenty and seventy five, I think is 0:11:46.360 --> 0:11:49.559 where we hit. They start backing away, and our investors 0:11:49.600 --> 0:11:52.000 aren't ready to step back in. The long term investors 0:11:52.000 --> 0:11:54.840 aren't ready to step back in. That's why you're seeing 0:11:54.920 --> 0:11:58.520 us peek out and kind of hold off. So what 0:11:58.600 --> 0:12:02.319 we need to see next is some sort of understanding 0:12:02.480 --> 0:12:04.959 by the investment community that the policies that the FED 0:12:05.000 --> 0:12:08.840 are dealing with are leading to a clearer outcome, a 0:12:08.880 --> 0:12:12.160 clearer roadmap, and then you're going to see our expectations. 0:12:12.200 --> 0:12:14.440 You'll see these investors come back to the table and 0:12:14.520 --> 0:12:17.439 gold will again have that slow, steady rise in its 0:12:17.440 --> 0:12:19.880 price point. Now you see these spikes when it comes 0:12:19.960 --> 0:12:24.679 into play around moments events. Again, earlier in the year 0:12:24.679 --> 0:12:26.599 we hit that over two thousand level, and it was 0:12:26.600 --> 0:12:29.520 again around that banking crisis. You start seeing those peaks. 0:12:29.520 --> 0:12:31.600 So it's important, but it's not the only factor to 0:12:31.640 --> 0:12:32.600 take into consideration. 0:12:33.400 --> 0:12:36.640 I'm interested in the idea of gold as a haven asset. 0:12:36.720 --> 0:12:39.360 So let's say we do have some of these instances 0:12:39.400 --> 0:12:41.440 that you were talking about that we've had this year. 0:12:41.760 --> 0:12:45.240 Why go for gold as the haven asset versus something 0:12:45.320 --> 0:12:46.000 like treasuries. 0:12:46.600 --> 0:12:49.800 I think what you start to see are two factors 0:12:49.800 --> 0:12:53.400 that are pretty significant in terms of performance. It's a 0:12:53.440 --> 0:12:55.120 limited source asset. 0:12:55.000 --> 0:12:57.920 So over long term performance. 0:12:57.720 --> 0:13:02.959 You'll see that gold will act appreciate, okay, And ultimately 0:13:03.440 --> 0:13:07.559 what you find with the asset is, second, it's very liquid. 0:13:08.160 --> 0:13:10.360 The asset trades about one hundred and fifty billion dollars 0:13:10.400 --> 0:13:14.120 a day. So what I'd say is those factors really 0:13:14.160 --> 0:13:17.720 weigh in and actually make people feel comfortable and confident. 0:13:18.200 --> 0:13:20.880 And they are not linked to anything like a credit 0:13:20.960 --> 0:13:25.120 rating or a dollar currency or whatever the case may 0:13:25.120 --> 0:13:28.240 be that could have another level of impact on the 0:13:28.280 --> 0:13:31.319 overall price performance and trading activity of an asset. So 0:13:31.640 --> 0:13:34.760 you're really looking at a unique asset that stands by 0:13:34.840 --> 0:13:39.439 itself and ultimately, with these unique drivers for consumption, will 0:13:39.480 --> 0:13:42.440 continue to push the price higher over time. And that's 0:13:42.440 --> 0:13:45.480 why I think people feel comfortable and confident putting it 0:13:45.520 --> 0:13:49.160 as a component, not the only component. Again, a component 0:13:49.200 --> 0:13:53.280 and a portfolio. 0:13:57.040 --> 0:13:59.520 You know, Joe, I'm curious about the supply side when 0:13:59.559 --> 0:14:02.120 it comes to gold. You know, the world gold Council, 0:14:02.160 --> 0:14:04.559 as you mentioned, represents a lot of the gold miners 0:14:04.559 --> 0:14:08.120 of the world. And you know, the supply chain story 0:14:08.200 --> 0:14:11.160 was such a big story with almost everything there for 0:14:11.200 --> 0:14:15.199 a few years, shortage of workers, shortage of industrial equipment, 0:14:15.600 --> 0:14:19.440 higher interest rates, everything sort of combining to cause some 0:14:19.600 --> 0:14:23.760 major supply chain issues, you know, a whole variety of products. 0:14:24.240 --> 0:14:27.120 Did that hit the mining the gold mining sector at all, 0:14:27.440 --> 0:14:30.520 And how does that supply side sort of affect the 0:14:30.560 --> 0:14:33.960 price or is it more you know, the miners are 0:14:33.960 --> 0:14:37.720 reacting to the price rather than you know, affecting the price, 0:14:37.760 --> 0:14:38.400 if you know what I mean. 0:14:39.240 --> 0:14:42.680 Yeah, it's a great question. And I'd say that no industry, 0:14:43.240 --> 0:14:46.840 at least from what I could see, was immune to 0:14:47.160 --> 0:14:49.280 what we experienced in the early days of COVID. 0:14:49.960 --> 0:14:50.480 As a matter of. 0:14:50.480 --> 0:14:55.200 Fact, the piece that impacted the gold market the most 0:14:55.480 --> 0:14:59.800 was transportation movement of assets around the globe. We are 0:14:59.800 --> 0:15:04.680 a physical asset, and when planes were grounded or space 0:15:04.720 --> 0:15:08.640 on planes was limited, or people were uncomfortable touching things 0:15:09.120 --> 0:15:10.880 for lack of a better way of dealing with it. 0:15:11.320 --> 0:15:16.080 We literally saw, for example, in the US comec's futures 0:15:16.160 --> 0:15:21.240 prices going out of think with what the underlying gold 0:15:21.240 --> 0:15:24.640 price was doing simply because they were trading at a premium, 0:15:24.640 --> 0:15:27.240 simply because it could not be matched with the gold 0:15:27.280 --> 0:15:29.520 that needed to be flown into New York, put into 0:15:29.520 --> 0:15:33.960 the vaults and actually collapse at premium. So we saw 0:15:33.960 --> 0:15:37.560 it there probably the most where you have an inability 0:15:37.600 --> 0:15:41.600 for assets to move around the globe. Now, mind sits refiners. 0:15:41.600 --> 0:15:45.320 They weren't in any way only impacted. They were all impacted. 0:15:45.840 --> 0:15:49.280 Mind sits refiners. They were all impacted in terms of 0:15:49.320 --> 0:15:53.120 the same way other corporations were impacted. Send employees home, 0:15:53.680 --> 0:15:56.240 you know, figure out how to reopen, deal with the 0:15:56.240 --> 0:15:58.880 PPP issues. All of those things came into play and 0:15:58.920 --> 0:16:02.240 they slowly came back online. What I think was also 0:16:02.320 --> 0:16:06.240 very challenging for us was when you've got gold sitting 0:16:06.280 --> 0:16:08.200 in a vault, how do you get in? How can 0:16:08.240 --> 0:16:11.600 you do your inspections? And every one of these organizations 0:16:11.640 --> 0:16:14.880 was scrambling to make it all work efficiently. Now, more 0:16:14.920 --> 0:16:19.240 than the constraints on the market, the safe haven nature 0:16:19.280 --> 0:16:22.360 of gold basically saw the benefits, and that's where the 0:16:22.360 --> 0:16:25.760 price moved. When people were concerned about risk, concerned about 0:16:26.120 --> 0:16:28.400 what's going to happen with their portfolio, they moved into gold, 0:16:28.440 --> 0:16:31.240 and that drove the price more than the limited amount 0:16:31.280 --> 0:16:34.040 of supply. When the mining companies were able to get open, 0:16:34.120 --> 0:16:36.400 the refiners were able to get open, they came back online. 0:16:36.560 --> 0:16:39.800 Transportation came on slowly and they came back online. So 0:16:39.840 --> 0:16:42.640 it had an impact like everywhere else. But we also 0:16:42.800 --> 0:16:47.560 saw that price appreciation was a consequence of people having 0:16:47.640 --> 0:16:50.640 that fear and that need for a safe haven asset. 0:16:50.920 --> 0:16:53.800 What about on the demand side, who are the biggest 0:16:53.800 --> 0:16:56.760 buyers of gold? I think you mentioned consumers already. I'm 0:16:56.760 --> 0:17:00.480 also interested in the central bank aspect, like how who 0:17:00.520 --> 0:17:03.760 which central banks and how much demand is coming from 0:17:03.800 --> 0:17:05.120 the central bank side as well. 0:17:05.840 --> 0:17:09.320 So far and away, the two largest markets for consumption 0:17:09.400 --> 0:17:11.840 of gold tend to be China and India, and that 0:17:11.920 --> 0:17:16.240 tends to be consumers that are retail oriented, mainly jewelry, 0:17:16.520 --> 0:17:20.480 but also small bars and coins, so a real consumer 0:17:20.560 --> 0:17:23.800 type market. It's grown out of a history and tradition 0:17:24.880 --> 0:17:27.919 of the affinity for gold, where people may not have 0:17:28.000 --> 0:17:30.960 had bank accounts, they may not have had access to 0:17:31.000 --> 0:17:34.840 the securities markets, and ultimately this was a mechanism for 0:17:35.280 --> 0:17:37.920 having something precious in terms of what they were looking 0:17:37.920 --> 0:17:41.200 to own but also saving their money. So those are 0:17:41.240 --> 0:17:45.440 the two markets that i'd say stand out prominently and continually, 0:17:45.480 --> 0:17:48.280 and they've developed and evolved over the last twenty years 0:17:48.320 --> 0:17:51.879 in a very fantastic way to even bring financial markets 0:17:52.240 --> 0:17:54.520 and financial assets to those markets as well. So you're 0:17:54.520 --> 0:17:56.680 seeing that more in China, but it's starting to appen 0:17:56.720 --> 0:18:00.919 in India. On the central banking side, what we've been 0:18:00.920 --> 0:18:05.480 seeing for let's call it thirteen years, is emerging market 0:18:05.560 --> 0:18:10.480 central banks diversifying their reserve currency portfolios and adding gold. 0:18:11.119 --> 0:18:13.520 What they're doing is they're moving into the asset for 0:18:13.600 --> 0:18:18.359 the concerns around inflation, concerns around need for liquidity, looking 0:18:18.359 --> 0:18:22.040 at how they diversify their foreign currency exposures to the 0:18:22.119 --> 0:18:24.960 dollar and the Euro. We just recently published our annual 0:18:25.000 --> 0:18:28.320 survey where we have over fifty five central banks that 0:18:28.400 --> 0:18:32.120 respond to us, and most have indicated that they're looking 0:18:32.200 --> 0:18:34.800 over the next five years to lower their reliance on 0:18:34.840 --> 0:18:37.080 the dollar and the euro, not just the dollar, the 0:18:37.119 --> 0:18:40.280 euro as well, and actually looking at gold and looking 0:18:40.280 --> 0:18:43.600 to increase the overall allocations that they're making there. Again, 0:18:43.640 --> 0:18:47.960 these are emerging market central banks mainly, and they're spread 0:18:47.960 --> 0:18:51.240 out across the globe. It's been a really interesting trend. 0:18:51.680 --> 0:18:54.960 One thing that's really interesting about gold as an investment 0:18:55.040 --> 0:18:57.800 is there are a variety ways to purchase it. You know, 0:18:57.840 --> 0:19:01.320 you can buy the GLD ETF. Many of our listeners, 0:19:01.359 --> 0:19:05.680 I'm sure are professionals who perhaps dabble in the futures market, 0:19:06.040 --> 0:19:08.800 that's the other way. But then there's this whole other 0:19:08.920 --> 0:19:13.000 world of gold coins that's gotten a lot of scrutiny lately. 0:19:13.080 --> 0:19:15.200 I'm I'm sure you know what I'm talking about quote 0:19:15.280 --> 0:19:19.480 unquote gold IRA companies. Washington Post out a story recently 0:19:20.000 --> 0:19:22.720 saying over the past decade, more than thirty customers in 0:19:22.760 --> 0:19:27.000 twenty states have sued a dozen gold IRA companies. Federal 0:19:27.040 --> 0:19:30.520 regulators have sued four companies, two in the past year alone, 0:19:31.080 --> 0:19:35.159 claiming investors were systematically charged as much as triple the 0:19:35.200 --> 0:19:38.600 coin's value. You know, if you're not a sophisticated investor 0:19:38.920 --> 0:19:42.840 working at a hedge fund, trading futures, or even dabbling 0:19:42.840 --> 0:19:46.000 in the ETF space, what do you need to know 0:19:46.280 --> 0:19:49.840 about buying gold in some of these schemes? You know, 0:19:49.840 --> 0:19:53.080 what's sort of the the alarm bells that go off, 0:19:53.440 --> 0:19:56.000 And furthermore, you know, I get the sense that it's 0:19:56.040 --> 0:19:58.560 hard to regulate these type of operations. 0:19:57.960 --> 0:19:59.479 And that's only a regulated asset. 0:19:59.520 --> 0:20:02.240 It's really they're not selling a regulated outset. So how 0:20:02.280 --> 0:20:04.959 are you thinking about these type of operations and what 0:20:05.000 --> 0:20:06.280 the listeners need to know about them. 0:20:06.359 --> 0:20:08.840 My dad's always telling me to buy gold bars. 0:20:08.800 --> 0:20:11.760 Buy just the big bars. Yeah, yeah, he goes big. 0:20:13.080 --> 0:20:15.959 That's a great point. I should take him on holiday 0:20:15.960 --> 0:20:19.879 to Italy for saying that. Let me unpack this a 0:20:19.880 --> 0:20:21.760 little bit, because I think there's a couple of things 0:20:21.760 --> 0:20:24.520 that are embedded in this question that people really need 0:20:24.520 --> 0:20:26.840 to have an appreciation for. So I want everybody to 0:20:26.880 --> 0:20:29.720 have a visual We often talk about the swimming pools, right, 0:20:30.440 --> 0:20:32.159 like the swimming pools and all the gold in the 0:20:32.200 --> 0:20:34.400 world gets stacked up around that whole thing. But think 0:20:34.440 --> 0:20:37.320 about what you've seen in photographs or maybe even in 0:20:37.720 --> 0:20:39.639 the real world when you visit them like the FED 0:20:39.880 --> 0:20:41.479 or you go on a tour the vault and there 0:20:41.520 --> 0:20:45.200 are large bars, the very large four hundred ounce large 0:20:45.240 --> 0:20:48.640 bar format was what we refer to. That large bar 0:20:48.840 --> 0:20:52.399 format is probably one of the largest markets. 0:20:52.000 --> 0:20:53.240 For gold worldwide. 0:20:53.720 --> 0:20:57.680 Okay, so everyone wants to just go to coins and 0:20:57.920 --> 0:21:00.600 little bars, and they're talking about those little tiny ones 0:21:00.600 --> 0:21:02.919 that are about the size of a of a simcard 0:21:03.040 --> 0:21:04.720 or maybe a little bit bigger than that. I want 0:21:04.720 --> 0:21:07.320 everybody to remember that the largest component that they need 0:21:07.359 --> 0:21:09.480 to be understanding is that when we buy gold for 0:21:09.560 --> 0:21:13.000 GLD for example, that's the kind of gold that we're 0:21:13.000 --> 0:21:16.720 transacting in. That is a wholesale large bar market. There 0:21:16.760 --> 0:21:20.240 are lots of institutional traders that are doing the work 0:21:20.280 --> 0:21:23.879 in that market. There's big banks like JP Morgan, HSBCICBC 0:21:24.359 --> 0:21:26.240 that are facilitating that through their role in. 0:21:26.240 --> 0:21:27.720 The London market. 0:21:27.920 --> 0:21:31.440 And those markets are open for large institutions to buy. 0:21:31.480 --> 0:21:34.440 So when we hear about pensions buying like in Texas 0:21:34.960 --> 0:21:38.320