WEBVTT - Jan van Eck on Successful Thematic Investing 0:00:02.240 --> 0:00:06.800 This is Master's in Business with Barry Ridholts on Bloomberg Radio. 0:00:07.320 --> 0:00:10.280 This week on the podcast, I have an extra special guest. 0:00:10.400 --> 0:00:13.240 His name is Jan van Eck and he has really 0:00:13.440 --> 0:00:18.680 a fascinating background in history. His father built Vanek Associates 0:00:18.720 --> 0:00:23.759 in n He never expected to go into the family business, 0:00:24.280 --> 0:00:28.479 kind of wandered about aimlessly. In the podcast portion we 0:00:28.560 --> 0:00:31.480 talked about the overlap between our backgrounds. It's kind of 0:00:32.240 --> 0:00:36.880 amusing to me. But eventually comes into the business, which 0:00:37.200 --> 0:00:39.919 was about a billion dollars in a u M and 0:00:40.040 --> 0:00:42.800 here it is, uh some twenty eight years later and 0:00:42.800 --> 0:00:46.120 they're up to fifty six billion dollars. He's the CEO 0:00:46.440 --> 0:00:50.440 and basically runs the shop with a team. It is 0:00:50.479 --> 0:00:54.040 an ensemble practice. They were very early into the world 0:00:54.040 --> 0:00:56.000 of e t f s and they do a lot 0:00:56.040 --> 0:01:00.720 of really interesting thematic funds. If you are all interested 0:01:00.760 --> 0:01:06.640 in international investments, or thematic investments or E s G investments, 0:01:06.640 --> 0:01:10.560 then you're going to find this conversation to be quite fascinating. So, 0:01:10.600 --> 0:01:13.759 with no further ado, my sit down with my friend 0:01:13.920 --> 0:01:18.640 Jan van ef This is Masters in Business with Barry 0:01:18.720 --> 0:01:22.960 Ridholts on Bloomberg Radio. My special guest today is Jan 0:01:23.080 --> 0:01:26.720 van Eck. He is the CEO and director of Van 0:01:26.840 --> 0:01:32.800 Eck Associates, where he has worked since. Van Eck manages 0:01:33.000 --> 0:01:37.160 about fifty six billion dollars in assets, eight percent of 0:01:37.240 --> 0:01:40.399 which is in E t F S, for which the 0:01:40.480 --> 0:01:46.200 firm has won numerous awards. Jan van Eck, Welcome to Bloomberg. 0:01:46.480 --> 0:01:49.320 Thank you so much. Garry. So you and I know 0:01:49.400 --> 0:01:54.520 each other um from a few different overlapping entities. Probably 0:01:55.000 --> 0:01:58.040 inside E t F S is the one that the 0:01:58.280 --> 0:02:03.200 entire sans Dashtan crew through Jim Wyant right through et 0:02:03.360 --> 0:02:06.840 F folks. Let's talk a little bit about your background. 0:02:07.320 --> 0:02:10.440 You work for a think tank, a newspaper, You go 0:02:10.520 --> 0:02:13.720 to law school, you get a degree from Stanford. What 0:02:13.760 --> 0:02:17.920 were you doing wandering the fields for so long? Didn't 0:02:17.960 --> 0:02:20.400 you just think it was inevitable you're gonna end up 0:02:20.919 --> 0:02:24.040 in the business that coincidentally has your last name on it. 0:02:24.520 --> 0:02:28.760 Uh In my own mind, Barry Uh, No, I really 0:02:28.800 --> 0:02:30.880 had no idea what I wanted to do. I graduated 0:02:31.360 --> 0:02:33.960 with a degree in economics and from what was your 0:02:34.000 --> 0:02:37.440 undergraduate Williams College? Right? And so you come out with 0:02:37.480 --> 0:02:40.960 an econ of degree And doesn't that suggest business and 0:02:41.200 --> 0:02:44.000 or finance or not does. But I did the minimum 0:02:44.080 --> 0:02:47.080 to get my degree an ECON, and I really enjoyed 0:02:47.200 --> 0:02:49.760 liberal arts. I took as many classes and I did 0:02:49.800 --> 0:02:53.520 something that, um, I think a lot of people should 0:02:53.560 --> 0:02:55.880 do and it's not done enough, which is audit classes. 0:02:56.200 --> 0:02:58.239 I mean, there's so much great stuff at at a 0:02:58.320 --> 0:03:04.799 college like Williams. So you know art, history, history, photography, philosophy, 0:03:05.040 --> 0:03:07.600 lots of things. You know, now people have a tendency 0:03:07.639 --> 0:03:09.919 to do that later in life. You did that when 0:03:09.919 --> 0:03:12.200 you were nineteen and twenty. That's free. You know, you're 0:03:12.240 --> 0:03:14.720 sitting for a course for an hour or two during college, 0:03:14.760 --> 0:03:16.880 and you know you've already paid the tuition. So the 0:03:17.160 --> 0:03:19.520 professors love to have more students there at least, you know, 0:03:19.560 --> 0:03:22.360 in a smaller school. And today you can order classes 0:03:22.440 --> 0:03:25.040 from Yale or m I T or n y U 0:03:25.320 --> 0:03:28.280 or any one of a hundred schools online for free. 0:03:28.480 --> 0:03:31.600 Are you still doing that? Uh? Well, I love to 0:03:31.639 --> 0:03:37.400 listen to podcasts and and get information. Yeah. Maybe, all right, 0:03:37.760 --> 0:03:41.520 we'll see, we'll see if they get together. Answer your question, right, Um, 0:03:41.560 --> 0:03:43.600 I didn't know what I wanted to do when I graduated, 0:03:43.680 --> 0:03:45.839 and you know that this great podcast I haven't read 0:03:45.840 --> 0:03:48.760 the book on the book range right, and and just 0:03:49.160 --> 0:03:51.880 experiment as much as you can when you're young. So 0:03:52.440 --> 0:03:57.240 I divide an internship at the Washington Post metrodesk. While 0:03:57.280 --> 0:03:59.280 I was in law school, I worked for a prosecutor 0:03:59.360 --> 0:04:01.920 one summer the UH in the Eastern District of New York. 0:04:01.960 --> 0:04:03.920 I worked for a corporate law firm during M and 0:04:03.960 --> 0:04:07.080 A deals, interned in Germany one summer at a bank. 0:04:07.120 --> 0:04:09.960 I mean, just tried as many different things. But the 0:04:09.960 --> 0:04:12.840 the thing that triggered my love of business was actually 0:04:12.840 --> 0:04:16.400 working in Silicon Valley and would you work for Silicon Valley? 0:04:16.560 --> 0:04:21.160 I actually after Brookings, Um, that was the thing Tank 0:04:21.640 --> 0:04:23.880 I realized I did not I want to get too 0:04:23.920 --> 0:04:27.960 PhD in economics. Academia was not freean and so I 0:04:28.000 --> 0:04:30.520 put my stuff in a car and drove across country 0:04:30.520 --> 0:04:33.760 and volunteered on the political campaign. Uh, we don't need 0:04:33.800 --> 0:04:38.520 to go into it. Um. It was a Senate campaign, 0:04:38.760 --> 0:04:41.160 and it was a losing Senate campaign. So but I 0:04:41.279 --> 0:04:44.359 learned a lot um and most importantly, I met some 0:04:44.520 --> 0:04:47.680 entrepreneurs in Silicon Valley who I just loved the attitude 0:04:47.880 --> 0:04:51.240 of I try something, it doesn't work. I tried something 0:04:51.279 --> 0:04:54.240 else that went public. I'm doing all these different things. 0:04:54.279 --> 0:04:57.839 Just that that creativity I didn't perceive. Even though I 0:04:57.839 --> 0:05:00.560 grew up in New York City area, you looking at 0:05:00.600 --> 0:05:03.080 the banks and going up the wrong of management, I 0:05:03.120 --> 0:05:05.480 did not perceive that level of creativity. So that's when 0:05:05.480 --> 0:05:08.400 I fell in love with business UM. And then you know, 0:05:08.440 --> 0:05:11.040 I decided to go back to that region for law school. 0:05:11.440 --> 0:05:13.960 It's lucky enough to get into Stanford UM. But that's 0:05:14.040 --> 0:05:16.440 that's which is a fabulous, fabulous school. That's a little 0:05:16.480 --> 0:05:20.240 more than luck. That's good undergraduate grades, good recommendations, and 0:05:20.279 --> 0:05:23.200 a good else at score. Yes, are you a good 0:05:23.200 --> 0:05:27.040 standardized test taker? I must be, But we'll talk more 0:05:27.080 --> 0:05:31.080 about that later. So even as a son of a financier, 0:05:31.160 --> 0:05:37.560 your dad opened and launched Vanac Associates in you never assumed, well, 0:05:37.680 --> 0:05:41.520 I'll end up in investing in the family business one day. Look, 0:05:41.680 --> 0:05:44.160 it's a psychological thing. I can't go through about. Tell 0:05:44.200 --> 0:05:47.760 you two things. The door was always open so my 0:05:47.920 --> 0:05:51.440 father and my father always said, do what you want 0:05:51.480 --> 0:05:54.800 to do, because your happiness is more important than you 0:05:54.839 --> 0:05:58.440 know whether this business UM is there or not. So 0:05:59.160 --> 0:06:01.320 how those things add up, I'll let for you know, 0:06:01.400 --> 0:06:03.920 third parties to decide. But you know, my my father 0:06:04.040 --> 0:06:07.520 was very no pressure to come into the business. So 0:06:08.520 --> 0:06:12.120 one of the questions that I like to ask people 0:06:12.200 --> 0:06:18.400 who come from a family background in finance is what 0:06:18.440 --> 0:06:21.760 are some of your earliest memories about money and investing. 0:06:21.800 --> 0:06:25.120 Do you remember the first stock you ever bought? Or 0:06:25.279 --> 0:06:28.720 based on what you're saying now, you're not that guy 0:06:28.760 --> 0:06:32.599 who was running Eliminate stand to buy UM shares in 0:06:32.680 --> 0:06:36.520 ge when you were nine. You know, it's kind of interesting. 0:06:36.839 --> 0:06:39.320 I was never a portfolio manager, and I wasn't the 0:06:39.320 --> 0:06:42.200 guy to buy shares. But you know, when I look 0:06:42.240 --> 0:06:45.760 back in high school UM, I would buy Coca Cola 0:06:45.839 --> 0:06:49.440 from distributors and resell them by the bottle. I worked, 0:06:49.800 --> 0:06:51.840 probably didn't have to work, so it's just a pure 0:06:51.920 --> 0:06:55.440 arbitrary service. Like said, there was something about wanting to 0:06:55.480 --> 0:06:58.320 do stuff to make money that was that was definitely 0:06:58.600 --> 0:07:02.359 early early on for me. Quite interesting. So Vanek was 0:07:02.400 --> 0:07:06.560 one of the first asset managers to offer US investors 0:07:06.720 --> 0:07:11.880 access to international markets. How did that affect the company 0:07:12.240 --> 0:07:16.280 and how how much overseas and investment does Vanek currently 0:07:16.280 --> 0:07:19.000 do today? We're an American firm, based in New York, 0:07:19.040 --> 0:07:23.080 but we always have had a very international orientation. Not 0:07:23.240 --> 0:07:25.960 only was the first fund that my father launched in 0:07:26.120 --> 0:07:29.760 an international equity fund. The idea was to take advantage 0:07:29.800 --> 0:07:32.520 of the rebound in Germany and Japan after World War Two. 0:07:32.600 --> 0:07:35.280 That was the investment thesis at least nineteen fifties. That 0:07:35.440 --> 0:07:37.840 was going to be Martiall plan and a whole European 0:07:37.880 --> 0:07:42.040 and Asian rebound right um and uh and cheaper valuations 0:07:42.080 --> 0:07:47.240 as well. We've heard that before or still again. Um so, 0:07:47.240 --> 0:07:49.840 so that was really the story, and so our perspective 0:07:49.840 --> 0:07:54.600 has always been international. Also, you know he later flipped 0:07:54.640 --> 0:07:57.560 that fund into a gold fund, and resources investing is 0:07:57.640 --> 0:08:01.280 very international as well, whether at the time South for CO, Australia, Canada, 0:08:01.600 --> 0:08:04.400 You're always a majority of our perspective and assets were 0:08:04.400 --> 0:08:07.320 not not in the US. Quite interesting, you guys have 0:08:07.400 --> 0:08:11.880 some really fascinating investment funds. The one you launched a 0:08:11.880 --> 0:08:16.120 few years ago, I I the Van Eck Vector's Video 0:08:16.200 --> 0:08:19.240 Gaming and E Sports et F, which I know is 0:08:19.280 --> 0:08:22.400 won a number of e t F awards Best Thematic 0:08:22.440 --> 0:08:29.040 ETF Best What was the thinking behind an E sports ETF? Well, uh, 0:08:29.240 --> 0:08:33.000 you know what we try to do is look from 0:08:33.040 --> 0:08:35.840 a longer term perspective, we don't want to just chase fads. Right, 0:08:35.880 --> 0:08:38.760 there's a lot of ETFs on micro themes, and give 0:08:38.840 --> 0:08:41.439 us an example on micro themes, and I mean that 0:08:41.720 --> 0:08:44.680 you know, like lots of things. Healthcare industry, for example, 0:08:44.720 --> 0:08:47.319 has been sliced and diced into cancer drugs. And this 0:08:47.520 --> 0:08:50.959 so really narrow or or even like five G like 0:08:51.200 --> 0:08:54.080 I mean, it's it's it's an interesting thesis. But what 0:08:54.160 --> 0:08:56.520 happens when six G comes out? Then they'll change the 0:08:56.559 --> 0:09:01.280 name of the funds. Of course, there's always a solution 0:09:01.360 --> 0:09:04.440 once the ao M is in the door. But um, yeah, 0:09:04.480 --> 0:09:06.520 So so I try to take out like a five 0:09:06.600 --> 0:09:08.480 or ten year view. And one of the things that's 0:09:08.520 --> 0:09:11.120 happening now so we've had the smartphone for ten years, 0:09:11.480 --> 0:09:16.760 is the virtualization of life. Virtualization meaning we exist in 0:09:16.840 --> 0:09:20.839 a a virtual world of software as opposed to in 0:09:20.840 --> 0:09:23.520 in meat space and social media. Right before you and 0:09:23.559 --> 0:09:26.199 I met in real life, I was listening to your podcast. 0:09:26.280 --> 0:09:29.200 I was you know, you and I have media. Although 0:09:29.200 --> 0:09:32.600 you're pretty uh pretty constrained, you're pretty low key on 0:09:32.600 --> 0:09:37.000 on the on the Twitter right, so so so entertainment 0:09:37.040 --> 0:09:39.600 world just going through that revolution. First of all, as 0:09:39.640 --> 0:09:41.880 we get wealth are as a society, more people enjoy 0:09:41.960 --> 0:09:46.240 sports entertainment, betting that that's a growth industry. But it's 0:09:46.280 --> 0:09:51.160 also transforming from the traditional you know, professional football, basketball, 0:09:51.200 --> 0:09:56.360 hockey into online gaming and the creation of teams competing 0:09:56.400 --> 0:10:00.120 against each other, and and that's just that could us 0:10:00.160 --> 0:10:03.600 continue to grow and their dimensions now right, it's not 0:10:03.720 --> 0:10:06.560 just the playing of the game, there's the watching of 0:10:06.640 --> 0:10:10.440 the game, and and there's the playing of those things 0:10:10.480 --> 0:10:14.719 on YouTube and people watching games and now audience participation 0:10:14.760 --> 0:10:17.520 Barry is likely to happen right where you're watching a game, 0:10:17.920 --> 0:10:20.160 and as a spectator you can vote on the teams 0:10:20.240 --> 0:10:22.720 or advise them. I don't. I don't do that, so 0:10:22.720 --> 0:10:24.800 so let me ask there's a there's a longer term 0:10:24.840 --> 0:10:27.760 future as so, so that blows my mind. My frame 0:10:27.800 --> 0:10:32.319 of references decades ago, when I was on a trading desk, 0:10:32.800 --> 0:10:35.440 one of my favorite things to do each Tuesday night 0:10:36.120 --> 0:10:38.520 was once everybody was done with their blodder and their 0:10:38.520 --> 0:10:40.320 P and L, which you had a save to a 0:10:40.400 --> 0:10:43.000 disk and then walk to the head trader's office. That's 0:10:43.000 --> 0:10:46.800 how long ago it was. The quote server would become 0:10:46.840 --> 0:10:50.000 a Quake server and all the traders would jack in 0:10:50.080 --> 0:10:53.360 and we would have this giant multiplayer game of Quake, 0:10:53.440 --> 0:10:56.959 which was so immersive. I would look up and uh, oh, 0:10:57.000 --> 0:10:59.319 I'm in trouble. It's past ten o'clock. I've been doing 0:10:59.320 --> 0:11:03.839 this since for already, and I found it fascinating. I 0:11:03.880 --> 0:11:09.800 cannot imagine watching other people play games. This is going 0:11:09.800 --> 0:11:13.840 to be a giant, burgeoning industry. It is already, and 0:11:13.880 --> 0:11:15.600 I think the only thing that we don't know the 0:11:15.600 --> 0:11:17.920 story that hasn't been written as a monetization of all 0:11:17.920 --> 0:11:21.400 that traffic and crowds, so we we know that people 0:11:21.440 --> 0:11:23.920 are doing it. You know, way more people watch these 0:11:23.920 --> 0:11:28.400 E Sports World Championships than right. I mean some of 0:11:28.400 --> 0:11:32.360 the kids kids, sorry, expression are making five five million 0:11:32.400 --> 0:11:35.600 bucks for for winning one of these things all the 0:11:36.040 --> 0:11:38.800 A lot of the owners of professional sports teams own 0:11:39.040 --> 0:11:42.120 e sports teams as well, so you know, it's a 0:11:42.360 --> 0:11:45.960 It's life is a racket, right, so the next next 0:11:46.000 --> 0:11:48.840 trend and having an et F just allows the rest 0:11:48.880 --> 0:11:51.679 of us normal people to participate that trend. The other 0:11:51.679 --> 0:11:54.840 thing that's really worth noting is Asia is a It's 0:11:54.880 --> 0:11:58.320 a huge cultural thing in Asia, right, not just in China, 0:11:58.440 --> 0:12:01.400 but in South Korea and Japan end and it's just 0:12:01.679 --> 0:12:04.400 it's just big. Culturally, a lot of stuff is being 0:12:04.840 --> 0:12:08.440 their life is being lived online. That's amazing. Let's talk 0:12:08.480 --> 0:12:12.200 about something that I'm fascinated with, the Van Eck Vector's 0:12:12.520 --> 0:12:16.920 green bond e t F. The obvious question, what's a 0:12:16.960 --> 0:12:20.760 green bond? Well, uh so, green bond is very simple. 0:12:20.960 --> 0:12:24.400 It is money raised by a company or a government 0:12:24.760 --> 0:12:29.720 that is supposed to go to improve operations that have 0:12:29.760 --> 0:12:33.920 a better effect on the environment. So bond by bond decision. 0:12:34.000 --> 0:12:38.360 It's not a company decision. So the dirtiest commodity company 0:12:38.360 --> 0:12:41.040 in the world could issue a green bond if it 0:12:41.120 --> 0:12:44.480 was improving it's processing to reduce the use of water 0:12:44.559 --> 0:12:47.200 for examp. So if you're a coal fired electrical plant 0:12:47.200 --> 0:12:49.319 and you want to raise money to transition to a 0:12:49.520 --> 0:12:52.480 natural gas would you consider that a green bond. So 0:12:52.679 --> 0:12:55.480 it's not. Luckily, it's not us making this the determination. 0:12:55.520 --> 0:12:59.160 There's a third party that certifies these green bonds, and 0:12:59.160 --> 0:13:01.400 it's and it's a big source of financing. It's it's 0:13:01.480 --> 0:13:04.800 it's grown. And these have become pretty popular, haven't they, 0:13:04.920 --> 0:13:08.280 Or they're starting to ramp up they're starting to. I mean, 0:13:08.720 --> 0:13:12.400 our funds not not huge. Um. I think what people 0:13:12.480 --> 0:13:16.440 sometimes says, I want perfection in my alcohol it values 0:13:16.520 --> 0:13:20.600 based or E s G injustment and perfection doesn't exist. 0:13:20.640 --> 0:13:23.800 There are tradeoffs in life. So the issue is okay, 0:13:23.880 --> 0:13:27.120 I get it, the environments getting better, but I may 0:13:27.200 --> 0:13:29.920 not like the issue, or it's a China government entity, 0:13:30.200 --> 0:13:32.800 or it's a polluter that or has some other kind 0:13:32.840 --> 0:13:35.560 of practices I might not like. So I mean, in 0:13:35.600 --> 0:13:38.640 the US, we have several environmental funds, and I think 0:13:39.080 --> 0:13:41.840 you have to stack those values and so we say, okay, 0:13:41.880 --> 0:13:45.520 if you care about the environment more than the other factors, 0:13:45.600 --> 0:13:47.880 then this is this is a good allocation for you, 0:13:48.120 --> 0:13:51.240 for for E s G investors. The old maxim don't 0:13:51.320 --> 0:13:53.920 let the perfect be the enemy of the good. Can 0:13:54.040 --> 0:13:56.640 very much apply, can it? I think so? Right now 0:13:56.720 --> 0:13:58.560 it's hard to it's hard to figure out how to 0:13:58.640 --> 0:14:02.240 optimize everything. So let's talk about something that's not so green. 0:14:02.559 --> 0:14:05.600 Two of your biggest funds are the gold miners and 0:14:05.640 --> 0:14:09.800 the junior miners. I've and that's what about twenty billion 0:14:09.840 --> 0:14:15.240 dollars all told. I noticed back in the day that 0:14:15.320 --> 0:14:18.520 when there were signs of inflation or signs of deficits. 0:14:18.960 --> 0:14:23.600 A lot of fund managers wanted an instant hedge on inflation, 0:14:24.080 --> 0:14:26.400 and so they would all pile into the junior miners. 0:14:27.240 --> 0:14:29.920 That behavior kind of changed when the g l D 0:14:30.120 --> 0:14:33.200 E t F came out. Why does anyone need the 0:14:33.320 --> 0:14:38.280 execution where managerial risk of a mine and its management 0:14:38.320 --> 0:14:40.920 team and expenses when you could just buy g LD 0:14:41.560 --> 0:14:45.720 and and there's your hedge. Am I oversimplifying that, or 0:14:46.040 --> 0:14:48.880 has has g l D as one of the biggest 0:14:48.920 --> 0:14:53.560 dtfs out there change the dynamic around the gold miners 0:14:53.560 --> 0:14:56.680 and junior miners? Uh? Yes, But let me give you 0:14:56.720 --> 0:14:59.400 some more historical context. Right, So we've had two big 0:14:59.440 --> 0:15:02.520 commodity booms in my lifetime, in the nineteen seventies and 0:15:02.560 --> 0:15:05.520 then in the odds, and they were very, very different 0:15:05.560 --> 0:15:09.080 for the operating companies because in the nineteen seventies commodities 0:15:09.120 --> 0:15:11.680 gold went from thirty five dollars eight hundred dollars, oil 0:15:11.720 --> 0:15:15.000 went up, all that stuff, but the cost of manufacturing 0:15:15.040 --> 0:15:18.680 all those commodities did not change. So the companies were 0:15:18.720 --> 0:15:22.200 like options. I mean, all all the revenue would go 0:15:22.280 --> 0:15:24.440 up and the costs really not go up. And so 0:15:24.560 --> 0:15:26.880 I mean the stocks were fabulous. I mean, so when 0:15:26.880 --> 0:15:29.080 the price of gold fund that we had in that 0:15:29.160 --> 0:15:32.080 decade would go up like a hundred hundred a year. 0:15:32.200 --> 0:15:34.320 We're gonna talk about that gold fund later. But the 0:15:34.400 --> 0:15:36.960 key is when the price of the commodities went up, 0:15:37.360 --> 0:15:39.760 the company generated a whole lot more earnings. Right. But 0:15:39.880 --> 0:15:42.640 now in this last cycle and the odds that was 0:15:42.720 --> 0:15:45.800 not the case. The costs of manufacturing for a variety 0:15:45.880 --> 0:15:50.760 of different reasons, Um, the cost would go up as well, 0:15:51.800 --> 0:15:55.080 the manufacturing costs, So energy was growing, so that was 0:15:55.120 --> 0:15:58.160 an input to mind that it was a bigger factor. Uh, 0:15:58.480 --> 0:16:01.320 you have to dig way more dirt per ounce of 0:16:01.360 --> 0:16:03.800 whatever you're pulling out, whether it's gold or copper or whatever. 0:16:03.920 --> 0:16:05.640 So there's just a lot of different factors. So the 0:16:05.720 --> 0:16:09.880 last cycle there wasn't as much return leverage, which is 0:16:09.920 --> 0:16:13.360 what you're asking about as in the nineties seventies. So 0:16:13.400 --> 0:16:16.120 now where are we today. Gold is hitting all time 0:16:16.200 --> 0:16:19.400 highs except in the US dollar. And I would agree 0:16:19.400 --> 0:16:23.040 with you, Uh, if you want a hedge against of 0:16:23.080 --> 0:16:26.720 the current monetary system and you're a little bit nervous 0:16:26.800 --> 0:16:30.160 about central bankers flying around in capes trying to fix 0:16:30.200 --> 0:16:34.800 every problem including the coronavirus. Then you probably want you know, 0:16:35.000 --> 0:16:38.680 several different hedges. You want gold mining shares, you probably 0:16:38.680 --> 0:16:41.400 want gold bullion, but you also want to look at 0:16:41.400 --> 0:16:45.560 bitcoin and that Oh yeah, so that is the that's 0:16:45.640 --> 0:16:50.240 the alternative asset for the younger generation. I mean, coin 0:16:50.280 --> 0:16:56.359 base has between thirty and forty million US American American customers. 0:16:56.440 --> 0:16:58.280 How do you deal with the fact that's something like 0:16:58.320 --> 0:17:01.720 a third of all bitcoins that have ever been mined 0:17:01.800 --> 0:17:06.440 have either been lost in the terms of being misplaced 0:17:07.000 --> 0:17:10.520 or literally hacked in stolen. How do you how does 0:17:10.560 --> 0:17:16.000 an investor manage that? I or custody is a major 0:17:16.080 --> 0:17:19.680 issue there. There are a couple of issues around bitcoin. Uh, 0:17:19.920 --> 0:17:22.679 Custody I think is being solved because you do have 0:17:22.760 --> 0:17:26.680 major institutions like Fidelity, uh, the New York Stock Exchange 0:17:26.720 --> 0:17:30.520 getting involved in offering bitcoin access having solved taken their 0:17:30.840 --> 0:17:34.320 custody issue away from you as far as you know, 0:17:34.359 --> 0:17:36.720 some way at what they call whales or people owning 0:17:36.720 --> 0:17:40.280 a lot of bitcoin or it being lost or whatever. 0:17:40.480 --> 0:17:43.520 And then the background of the mining community are point 0:17:43.560 --> 0:17:45.119 and we've got a lot of slides on our on 0:17:45.160 --> 0:17:50.240 our website to show it is the diversification of ownership, trading, 0:17:50.320 --> 0:17:53.040 and mining is so much these days. I don't think 0:17:53.080 --> 0:17:56.200 it's a practical concern to say that this is one 0:17:56.320 --> 0:17:59.680 just manipulated market by one entity or something. I'm not 0:17:59.720 --> 0:18:02.600 saying it's manipulated. I'm saying people seem to be You know, 0:18:02.640 --> 0:18:04.720 when one out of three dollars or even if it's 0:18:04.720 --> 0:18:08.840 one out of four dollars in bitcoin seems to have vanished, 0:18:09.040 --> 0:18:11.520 that kind of raises a question for me. Maybe it's 0:18:11.520 --> 0:18:13.640 still early days and a little bit of the wild West, 0:18:13.680 --> 0:18:17.840 and they'll eventually wrestle that into submission. But I think 0:18:17.840 --> 0:18:21.320 that's scared some people. All of these assets have their 0:18:21.320 --> 0:18:23.640 pros and cons right, I just say buy a basket, 0:18:23.680 --> 0:18:26.240 because if there is a being scared to the system, 0:18:26.320 --> 0:18:28.480 what's gonna go all we care about what goes up more. 0:18:28.880 --> 0:18:31.040 We don't know. Bitcoin could go up way more than 0:18:31.119 --> 0:18:34.639 gold chairs or bal bullion. So if you can solve 0:18:34.640 --> 0:18:37.160 the custody issue for yourself, then I then I think 0:18:37.200 --> 0:18:40.240 I don't care about your concern. Quite interesting, Let's talk 0:18:40.280 --> 0:18:44.359 a little bit about the company that you joined in 0:18:44.520 --> 0:18:48.040 ninety two, and I want to focus on the era 0:18:48.200 --> 0:18:53.480 in the nineties seventies where your dad had an extremely 0:18:53.720 --> 0:19:00.080 prescient call into gold in a very inflationary era. What 0:19:00.280 --> 0:19:03.400 more than just being a pundit who said gold's going up, 0:19:04.040 --> 0:19:07.080 he made a giant bet on that tell us about it. 0:19:07.320 --> 0:19:09.720 So my father started the firm in fifty five. He 0:19:09.760 --> 0:19:12.439 actually started it later in life, and so in the 0:19:12.600 --> 0:19:16.880 in the sixties, he had just gotten married. Um, he 0:19:16.920 --> 0:19:19.200 was just over fifty years old and he was getting 0:19:19.200 --> 0:19:23.480 a degree at night at n y U in economics, 0:19:24.440 --> 0:19:27.840 and one of his professors was an Austrian economist called 0:19:27.920 --> 0:19:31.160 Ludwig von Mises. And if you know anything, I mean 0:19:31.200 --> 0:19:35.920 he's famous, right, but Austrians were never really accepted into 0:19:36.200 --> 0:19:40.640 academia in the United States. Actually was not a full professor, 0:19:41.080 --> 0:19:43.840 he was just sort of an adjunct. But anyway, my 0:19:43.920 --> 0:19:47.840 father they are sort of hardcore monitorists and they really 0:19:47.840 --> 0:19:51.120 focus on money, supply, money, you know, and it was basically, look, 0:19:51.440 --> 0:19:53.840 guns and butter were happening in the nineteen sixties, my 0:19:54.040 --> 0:19:57.680 supply was exploding and eventually that was going to break 0:19:57.720 --> 0:20:00.439 into inflation, and the way to make money off of 0:20:00.480 --> 0:20:03.560 that was to invest in gold. Now, as you said, 0:20:03.600 --> 0:20:06.479 I really think it's amazing the risk he took at 0:20:06.520 --> 0:20:09.880 that point in time because gold had always been fixed 0:20:10.400 --> 0:20:13.000 against the U. S. Dollar for the entirety of history 0:20:13.560 --> 0:20:17.000 by the government. Yes, for almost two hundred years of 0:20:17.040 --> 0:20:20.080 our history, gold had been fixed. He said, this paradigm 0:20:20.119 --> 0:20:22.479 is going to break. And that's really the philosophy of 0:20:22.480 --> 0:20:24.879 our firm, which is you can't just look at the 0:20:24.960 --> 0:20:27.320 four corners of the financial markets. You have to look 0:20:27.359 --> 0:20:33.040 at technology trends, political trends, and major economic trends. And 0:20:33.040 --> 0:20:35.320 and several years later, so he didn't have a lot 0:20:35.359 --> 0:20:38.440 of patients that that broke. By the way, for folks 0:20:38.480 --> 0:20:41.160 who may not be familiar with Ludwig van Miss, he's 0:20:41.280 --> 0:20:43.760 one of the most famous of the Austrians. A number 0:20:43.800 --> 0:20:46.600 of books and really well known. If you're more interested 0:20:46.600 --> 0:20:49.760 in more of that, just just go Google than Miss. 0:20:49.800 --> 0:20:53.840 But I'm fascinated by the gold trade. Your father puts 0:20:54.200 --> 0:20:57.199 how much money into gold at that? Well, he's so 0:20:57.280 --> 0:20:59.480 he had an international equity fund and he went to 0:20:59.560 --> 0:21:03.639 Sharrel he said, I'm doing this, and he eight plus 0:21:03.680 --> 0:21:06.080 percent of the fund and buy gold mining shares. Now 0:21:06.080 --> 0:21:08.480 you couldn't buy gold, So that he was a little 0:21:08.480 --> 0:21:11.760 bit to your point before he was forced into buying 0:21:11.800 --> 0:21:14.080 the share no g l D and if you want 0:21:14.080 --> 0:21:17.399 to buy actual gold, you're buying futures and its leverage 0:21:17.440 --> 0:21:20.760 in time future. Then that's right. You were talking seventies, 0:21:21.080 --> 0:21:24.480 so there really different exactly, So three quarters of a 0:21:24.520 --> 0:21:27.040 billion dollars more or less into gold or this was 0:21:28.000 --> 0:21:29.840 this was way before that. Oh my god, the fund 0:21:29.920 --> 0:21:32.960 was teeny How big was teeny? Oh? I mean it 0:21:33.040 --> 0:21:37.040 was way less than a hundred millions. Okay. No one 0:21:37.119 --> 0:21:40.159 wanted international investments in the nineteen sixties. Is kind of 0:21:40.200 --> 0:21:42.880 like today, right, I mean, you don't want to even 0:21:42.920 --> 0:21:46.280 talk about it. So he piles into gold in this 0:21:46.520 --> 0:21:51.200 small formerly international equity funds, it does nothing for two 0:21:51.320 --> 0:21:54.320 or three years, to what our clients saying, What are 0:21:54.359 --> 0:21:57.399 investors saying when you have us in gold and not 0:21:57.440 --> 0:22:00.960 only is it doing nothing, but thanks to inflation, it's 0:22:00.960 --> 0:22:05.200 actually worthless each year. Well, yeah, gold was less. I 0:22:05.240 --> 0:22:07.440 think the companies were, Okay, I haven't you know, looked 0:22:07.480 --> 0:22:10.560 at the performance over that time period. But the industry 0:22:10.640 --> 0:22:13.960 was so small berry, right. The industry exploded in the 0:22:14.040 --> 0:22:16.840 late seventies because of money market funds when the rate 0:22:16.840 --> 0:22:19.240 you could get on banks was regulated, So it was 0:22:19.280 --> 0:22:23.080 a cottage industry. And you know what ended up happening though, 0:22:23.119 --> 0:22:26.760 because the performance was so tremendous that fund was the 0:22:26.800 --> 0:22:29.919 best performing mutual fund in the industry in the seventies 0:22:30.480 --> 0:22:35.320 and that decade, that Decadecade. Yeah, Peter, Peter Lynch everything, 0:22:35.440 --> 0:22:38.919 Peter who Yeah, exactly cos he should have been gold 0:22:39.000 --> 0:22:41.159 and he you know, he went on MERV Griffin. I 0:22:41.160 --> 0:22:43.880 mean it was action. It was such a big deal 0:22:43.960 --> 0:22:47.320 back then. It was it was popular culture, right, I mean, 0:22:47.400 --> 0:22:52.240 interest rates were going into the teens and uh, home 0:22:52.280 --> 0:22:56.560 watching my dad, griff please going to embarrass us. And 0:22:56.760 --> 0:23:00.720 so obviously that had to help the company. Is from 0:23:00.760 --> 0:23:03.960