What Gold’s Past Tells Us About Its Future

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And he said, Barry, the irony is
we struggled to find any

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investment over a three to four
year period that we have ever

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had that performed as well as
gold during that period.

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And yet we were so happy to sell
it.

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But it was a good, I really
enjoyed listening to the history

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again, just to be reminded how
that's stupid I was for not

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owning them.
You know, I, I won't make the

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same mistake again with this
thing that Jake's in now in New

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Zealand when he gets started.
Like you just have to be a

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shareholder.
You can't buy shares in in juror

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right now, right, But but you
can buy what he's probably going

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to acquire to consolidate that
region.

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Yeah.
No, I have.

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I have shares in every other New
Zealand company anyway.

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No, I think New Zealand looks
very exciting.

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Absolutely.
Well Speaking of exciting mate,

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we're excited to to have you
sitting down with us once again

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here in town.
So we just had to, we had to

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request that you pop in and we
talk gold because gold stocks

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are, are probably hotter than
I've ever seen them.

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Not not they've, they've been
hotter in the past, I'm sure,

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but they have.
But this is, this is a special

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time for, for people with gold
stocks.

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And you're a gold historian,
Sean.

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I mean, of course, you, you, you
were, we know you, we know your

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expertise.
We've talked about it many

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times, But I think they're down.
You've got phenomenal knowledge

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of, of corporate history across
Australia, the the ebbs and

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flows of the gold market, how
that relates to the miners,

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when, when the miners have made,
you know, great capital

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allocation decisions, when they
made poor ones.

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And I just think it'd be great
to have a bit of a, a bit of a

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conversation about these big
themes that are popping up right

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now, especially as they relate
to the gold miners, the forces

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impacting them, how you're kind
of evaluating it all and, and

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giving you historical like
reflections.

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You know what, what do you think
are the big important decisions

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for for for investors and for
the miners to make right now

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too?
So thank you for joining us.

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Yeah.
Oh, pleasure to be here always,

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always yeah and and just loving
all the content you guys are

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putting out lately.
I'm glad you slowed down a bit

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because it's easier to keep up
Which?

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Is good easier for us?
To yeah, yeah, no, no, no.

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But it's great.
I'm, I'm, I'm loving it.

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I'm really loving it.
So it's been fantastic.

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I think look, gold shares have
been much better than this in

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the past, right?
I mean, if I go back to when I

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very first started in the
business in, in, in 1984, but

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you could not sanely value any
gold mining company based on

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some cash flow or whatever.
They, they, they, they were too

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high for that, right?
But people just used to do the

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EV per resource oz multiple and
things like that, right?

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Like, I mean, and I was very,
very young and naive in the

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market, but literally all people
could do was compare one company

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to another and say, which, which
do you think is better relative

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value?
But everyone had to own some

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gold in their portfolio because
we were still very much in the

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shadow of 1980.
You know, when I, I mean, I

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turned up, I was 20 years old.
And you look at the chart and

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you go dickhead, you know, like
it was, it was, it was four

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years later.
And instead of 8:50, it's at,

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it's at, it's at 400 right on
the, and on the way to 250.

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When I very first started,
before we had the, the boom in

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8687.
So like if you weren't paying

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attention and I wasn't paying
attention to the gold market in

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1980, like it was hard, but we
were in the shadow of that,

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right?
But it was very much the shadow

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because the the real gold equity
boom had been in 8283.

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Like the market went up in 80,
but the stocks didn't respond in

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80.
They didn't go up until after

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that until it actually came back
to 600 because that when it was

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going up, there was so much
panic on people will worry about

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what's happening in the world.
They weren't buying gold stocks

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if you like.
But by the time I I sort of

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turned up, it was, it was all,
it was all relative.

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And it was only when in when.com
started that I remember when

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everyone was going 0these.com
companies.

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They're, you know, they're doing
revenue multiples, they're doing

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clicks, they're doing that.
And I go, this isn't you.

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This is what the gold producers
used to do in the 1980s.

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Like you, you know, you, you
could only have relative value

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because you couldn't possibly
justify the share price based on

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the earnings at the time, right?
And I, I was talking to someone

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I know who's, you know, I've
known for a very long time.

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And I was saying to him, it does
feel to me at some point, like

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if you're an insider in this
market, it'll be very difficult

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because when the generalists
really get in and when the, when

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the market really takes off, as
I believe it will, you'll be

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looking at it as an insider go,
well, that company's not worth

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this.
But there'll be a whole group of

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people out there for whom it's
only just become investable

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because it's just got over some
threshold like a billion dollar

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market cap or whatever, you
know, so funds can have a look

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at it or some section of the
community somewhere else has

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decided they want to buy.
And and you'd almost be

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dangerous that you you'd be
going.

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Oh, well, this is this is nuts.
But in a it, it it might just be

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getting going.
You know, I think that's the I

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think that's going to be the
fascinating part.

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If we get the kind of moving in
into gold in in the coming years

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that I think could happen do.
You think, do you think, do you

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think narrative follows price or
do you think Price follows some

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sort of narrative?
I find myself kind of just just

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telling a story because the
price went up, and if the price

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didn't go up then I wouldn't be
telling myself that story.

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Oh, there's no doubt that people
constantly create a narrative to

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justify the position that they
find themselves in.

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And, and, and I think that
that's like there was a, there

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was a like a colour supplement
in the weekend fin review.

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I remember.
And I think it was Brett Fogarty

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mining, you know, W Australian
mining guy was standing on the

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rocks down South somewhere.
And he'd been kind of thinking

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about what happened in the past.
And there was a whole thing

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about mining booms and busts and
whatever.

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And Michael Chaney was quoted in
that.

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And he said, why does anyone,
why do you care about anyone

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telling you where it's going
next?

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We're not one of those people
told you it was going to be

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here.
You know, like that's what

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happens.
You get all the people at the

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top of the market.
You're all these people telling

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you what's happening.
Actually, none of those people

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predicted the boom that's
happening.

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But now you're in the middle of
the boom.

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They're all giving you the
perfect rationalization for why

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there's a boom, what's going on?
You know, I mean, I think where

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where technical analysis is, I
think is really important and

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not cup and handles and you
know, heads and shoulders and

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things like that, but just
generally looking at charts and

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long term trends and
particularly ratios, and we

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should talk about ratios today.
It's those things I think that

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give you an idea of it's all
that relativity.

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You know it, everything is
relativity.

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There's there's only there's how
many investment opportunities in

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the world.
There's this amount of money

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they keep making printing more
and more money.

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People got to find places to
shove it.

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You know, people have got to
find somewhere to put that

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money.
And it's just in this big

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plumbing system that goes around
the place.

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And I think the best way to try
and figure out when something's

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ending is is really, you know,
the end of the day, if the trend

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is still your friend, then you
should stick with it.

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You need to be looking for when
those long term trends are

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ending.
And, and, and, and I think

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that's a, you know, a very good
example in gold and things like

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that, long term averages and
things like that.

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You don't want to be trading
stupid smoothing average

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crossovers on a, you know, on a
5 minute chart or whatever.

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That's for but the idea of
watching the 200 day moving

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average and the 200 week moving
average and those type of things

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and looking when big macro
investors are coming in and

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coming out, that'll be as good
as any other, you know,

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narrative, really the picture,
the picture tells 1000 words,

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right?
You just if you looked at the

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picture and never listened to
what was in the news, I think

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you generally do do better.
So do do you think of the

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technical analysis in that case?
This is pretty uncharted

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territory for us getting, do you
think of it in, in relation to

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what what humans out there in
the market are thinking and how

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do you kind of balance that with
what you just said before the

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the relativity aspect of it?
So, so, so two different things.

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So, so the relativity is about
the, the ratio of 1 chart to

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another.
And at one point where something

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is so compelling relative to
something else that people might

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switch.
And we can talk about the gold

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silver ratio in a minute, but
just talk about technical

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analysis.
Charts are just a map of human

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emotions.
That's my that's my view.

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And to the extent that that our
head and shoulders means

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something in a market, it's
really that it's just reflecting

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the way people behave around
tops.

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And you and you far more see
like head and shoulders pattern

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of tops than you do at bottoms.
People try and say there's a

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head and shoulders bottom.
But I mean, I think bottoms are

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an event and tops are a process.
And I didn't make that up.

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That's a well known quote, but I
certainly agree with that.

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Bottoms tend to be very dramatic
and very kind of quick, you

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know, whereas tops are a big
sort of process and different

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people rolling in and out.
So the head and shoulders is

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kind of like the thirst rally
and you get the second one and

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then you get that last dead cat
rallied where you know you.

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And quite often if you if you
have a three like a top like

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that, the it'd be most bullish
on the third one, but it won't

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make a new high.
And when, you know, the

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sentiment is bigger than it was
at the high, because now

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everyone who saw that previous
high and missed out, now they're

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in.
But meanwhile, the smart money's

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already making the exit because
they're looking at the relative

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value of something else.
And you know that you've, you've

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got that, that trade.
And I think so those tops like

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head and shoulders and things,
they're just mapping the kind of

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emotions of kind of greed and
fear, if you like.

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So I don't, you know, try not to
put too many trend lines on

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charts.
You know, we, we have a process

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in our business.
And if you've seen my public

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presentations where we just
decided to put a scoring, we

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developed a scoring system.
So every market's from -6 to +6

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at a daily and a weekly time
frame, if it's got a positive

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weekly score, we have a green
background on the chart, it's

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got a negative weekly score, we
have a red background.

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All right, nice and simple, nice
and simple.

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And if our client is a copper
producer and the chart has a red

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background and the chairman says
Cru says this and Cru says that

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we go, it has a red background.
Like I don't, I don't know why

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it necessarily has a red
background, but copper's in

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downtrend.
So I think that you should be QP

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hedging.
I think that you should be

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worried about your risk.
And when the green background

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matches the external narrative,
then we should pay attention.

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But like, everyone knows the
story, but the market's still

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going down.
So it's the stuff you don't

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know, you know, Is there that
that Donald Rumsfeld quote

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about, you know, whatever.
I can't remember what it is.

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I won't do it.
Just.

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No, no, no, no.
Yeah.

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That it's that kind of thing.
You, you, you.

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You don't know, right?
You can't know what's going on,

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you can't be in the mind of 1.8
billion Indian people and how

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they're feeling about silver
right now.

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But you can kind of have a bit
of a guess, you know, by looking

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at the gold silver ratio and
what they've done in the past.

224
00:10:14,760 --> 00:10:17,160
But it's that.
So it's that thing of, you know,

225
00:10:17,240 --> 00:10:21,400
I think charts for us, it's just
trend and then we introduce

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00:10:21,400 --> 00:10:25,400
score.
So and the score is if the gold

227
00:10:25,400 --> 00:10:29,720
is an uptrend, that's fine.
But if as it was 3 weeks ago, it

228
00:10:29,720 --> 00:10:35,040
has a + 6, then we can say to
our clients like, we don't know,

229
00:10:35,040 --> 00:10:37,640
but we can look back and show
you every other time that our

230
00:10:37,640 --> 00:10:42,280
scoring got to +6 that it
doesn't tend to go to so well in

231
00:10:42,280 --> 00:10:44,360
the months or weeks the
following, right?

232
00:10:44,680 --> 00:10:50,480
And so we've just seen in gold
a, a, a, a second touch this

233
00:10:50,520 --> 00:10:52,560
year of our weekly score getting
to +6.

234
00:10:52,560 --> 00:10:55,720
It happened in April and we sort
of said, oh, this is a bit of a

235
00:10:55,720 --> 00:10:58,520
worry, but it the, the uptrend
remains.

236
00:10:58,520 --> 00:11:01,160
So the trend was still good.
The score was high, went

237
00:11:01,160 --> 00:11:04,240
sideways for a while and then it
took off again and we then saw

238
00:11:04,240 --> 00:11:08,240
another +6.
Now the only time that we've

239
00:11:08,240 --> 00:11:11,000
seen our scoring the way it is
and a few other things that we

240
00:11:11,000 --> 00:11:15,480
look at as extended as the
market was 3 weeks ago for U.S.

241
00:11:15,480 --> 00:11:22,720
dollar gold was in 2006, May
2006, in 2008 and in 2011,

242
00:11:23,080 --> 00:11:26,760
literally in the weeks where the
gold market topped in each of

243
00:11:26,760 --> 00:11:30,520
those three years.
And the shortest period of time

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00:11:30,520 --> 00:11:33,720
it took to make a new high after
that was in 2006 was about 16

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00:11:33,720 --> 00:11:36,960
months, and it retraced
something like 15% from that

246
00:11:36,960 --> 00:11:39,960
high.
So, yeah, so we say at the

247
00:11:39,960 --> 00:11:43,680
moment the idea that gold might
not make a new high in U.S.

248
00:11:43,680 --> 00:11:46,920
dollar terms for the next 12 to
18 months and might retrace

249
00:11:46,920 --> 00:11:50,840
between 10 and 20% from the high
that we saw three or four weeks

250
00:11:50,840 --> 00:11:51,920
ago.
Like why not?

251
00:11:52,160 --> 00:11:53,760
We've already done 10.
Percent, yeah.

252
00:11:53,840 --> 00:11:55,280
And and that would be healthy,
right.

253
00:11:55,680 --> 00:12:01,200
And then if you kind of pin the
queues at Martin Place as a very

254
00:12:01,200 --> 00:12:03,880
visible idea of like people out
buying gold and doing whatever.

255
00:12:03,880 --> 00:12:06,320
Like I, I, I said at the time, I
said that's a good idea poorly

256
00:12:06,320 --> 00:12:08,120
executed.
Like I think it's a good idea to

257
00:12:08,120 --> 00:12:10,320
belong to be buying gold, but
I'm not sure I'd be racing any.

258
00:12:10,320 --> 00:12:12,560
I don't want to queue for
anything, but I certainly

259
00:12:12,560 --> 00:12:14,800
wouldn't be queuing to buy gold
when it's at the the height.

260
00:12:15,000 --> 00:12:16,720
And I dollar gold was even more
stretched.

261
00:12:16,720 --> 00:12:19,160
I dollar gold was the was the
most stretched to have been in

262
00:12:19,160 --> 00:12:22,000
35 years by like distance from
those averages and things like

263
00:12:22,000 --> 00:12:23,880
that.
So you just look at those

264
00:12:23,880 --> 00:12:25,960
things.
What does it mean?

265
00:12:25,960 --> 00:12:30,000
Maybe it means nothing, but
people tend to do the same thing

266
00:12:30,000 --> 00:12:31,720
over and over again.
There's those kind of repeatable

267
00:12:31,720 --> 00:12:34,160
patterns, greed and fear.
And we just look at the moment

268
00:12:34,160 --> 00:12:38,840
and go, yeah, I I certainly look
at it and go, I think it would

269
00:12:38,840 --> 00:12:42,160
be healthy for gold.
We, we described it to our

270
00:12:42,160 --> 00:12:46,080
clients like we're
mountaineering and like we're

271
00:12:46,080 --> 00:12:48,520
looking out and this, the
climb's getting steeper and

272
00:12:48,520 --> 00:12:50,320
steeper and we go like, are we
at the mountaintop?

273
00:12:50,760 --> 00:12:53,400
We think this is a false summit.
We don't, we don't see anything

274
00:12:53,400 --> 00:12:56,000
that says that this is the high
in gold for this move.

275
00:12:56,280 --> 00:12:59,160
So the summit's up there
somewhere in the clouds, No one

276
00:12:59,160 --> 00:13:01,840
knows where it is.
But the idea that you know, you

277
00:13:01,840 --> 00:13:05,480
need to acclimatize, you need to
come back from, from this level,

278
00:13:05,480 --> 00:13:09,080
spend some time digesting,
squeeze some of the people out,

279
00:13:09,080 --> 00:13:11,880
bring some new people in.
And for gold mining companies,

280
00:13:11,880 --> 00:13:13,560
wouldn't that be fantastic?
I mean, imagine if the gold

281
00:13:13,560 --> 00:13:16,200
price just stays around the
current level in Australian

282
00:13:16,200 --> 00:13:19,600
dollar gold or even 3 or $400.00
lower than the the next 6 hours

283
00:13:19,600 --> 00:13:22,360
a month.
I mean, the amount of money that

284
00:13:22,680 --> 00:13:25,160
well run gold mining companies
are going to make through that

285
00:13:25,160 --> 00:13:27,520
period of time and the amount of
attraction that's going to have

286
00:13:27,520 --> 00:13:30,680
from generals investors is going
to be extraordinary, right?

287
00:13:31,080 --> 00:13:33,320
Well, I mean, what happened in
the wider world between those

288
00:13:33,320 --> 00:13:37,520
dates that you just mentioned,
2000 and six, 2008 and 2011 was

289
00:13:37,520 --> 00:13:39,560
pretty wild as well.
We saw the S&P 500 drop more

290
00:13:39,560 --> 00:13:40,400
than 50%.
Oh.

291
00:13:40,520 --> 00:13:41,080
Absolutely.
Yeah.

292
00:13:41,080 --> 00:13:43,320
Yeah, just.
Bizarre stuff the the world sort

293
00:13:43,320 --> 00:13:45,160
of threw.
So it's kind of interesting to

294
00:13:45,160 --> 00:13:47,840
take that on into account and
sort of zoom out and see what

295
00:13:47,840 --> 00:13:51,680
what gold did over that period.
So from 2000 to 2011 from the

296
00:13:51,680 --> 00:13:57,160
very the beginning of the bull
run in 2000 until right until

297
00:13:57,160 --> 00:14:00,640
after the high in 2011.
But encapsulating all of those

298
00:14:00,800 --> 00:14:04,240
those spikes I've just talked
about, you had two things

299
00:14:04,240 --> 00:14:06,240
prevailing.
You had the US dollar in

300
00:14:06,240 --> 00:14:08,960
downtrend and you had gold
outperforming general equities

301
00:14:09,560 --> 00:14:14,200
for 97% of that time.
For a brief period during the

302
00:14:14,200 --> 00:14:16,840
the global financial, the
crisis, that might not have been

303
00:14:16,840 --> 00:14:19,360
the case with the US dollar.
But but basically for pretty

304
00:14:19,360 --> 00:14:21,920
much that whole run, you had
what we've described to clients

305
00:14:21,920 --> 00:14:24,560
and I've done in public
presentations as dual tailwinds,

306
00:14:24,560 --> 00:14:27,400
like the best environment for
gold historically that we can

307
00:14:27,400 --> 00:14:30,320
find and anything is gold is
outperforming general equities

308
00:14:31,160 --> 00:14:34,760
and the dollar is in downtrend.
Those are like, that's like

309
00:14:34,800 --> 00:14:37,920
absolute rocket fuel for gold.
And that's what we have at the

310
00:14:37,920 --> 00:14:39,560
moment.
We have the dollar in downtrend

311
00:14:39,560 --> 00:14:42,320
just starting, you know, while
it's under 100, it certainly

312
00:14:42,320 --> 00:14:44,520
looks like and the US seem to
have an incentive to make the

313
00:14:44,520 --> 00:14:47,160
dollar go lower.
You know, that would be sort of

314
00:14:47,160 --> 00:14:49,480
quick that Trump's the only CEO
in the world trying to trash his

315
00:14:49,480 --> 00:14:52,840
share price on purpose, you
know, if the dollar is the share

316
00:14:52,840 --> 00:14:57,280
price of the US of the USA.
But the really big one I think,

317
00:14:57,280 --> 00:15:01,080
and it's misunderstood by a lot
of people is, is the gold out

318
00:15:01,080 --> 00:15:04,000
before me general equities and
that's the Dow gold ratio or the

319
00:15:04,000 --> 00:15:06,320
S&P gold ratio or whatever you
want.

320
00:15:06,400 --> 00:15:09,200
And I was just a bit of a walk
down memory lane for a minute.

321
00:15:09,200 --> 00:15:12,160
2003, I went to diggers and
dealers.

322
00:15:12,920 --> 00:15:15,880
Ellison gave a presentation.
He talked about the Dow gold

323
00:15:15,880 --> 00:15:17,920
ratio and I think he probably
the first time he talked

324
00:15:17,920 --> 00:15:20,680
publicly in Australia about it.
And Dow ratio might have been

325
00:15:20,680 --> 00:15:23,040
like 35 to 1.
So this is that, you know, you,

326
00:15:23,160 --> 00:15:25,240
you could sell one of every
share in the Dow and you could

327
00:15:25,240 --> 00:15:28,200
buy 35 ounces of gold.
And he said, you people are all

328
00:15:28,200 --> 00:15:30,880
so bearish and you're doing all
this hedging and you're negative

329
00:15:30,880 --> 00:15:33,160
on gold.
You should be bullish on gold.

330
00:15:33,160 --> 00:15:36,440
Like gold is so cheap relative
to or equities are so

331
00:15:36,440 --> 00:15:38,760
overvalued, but you want to be
investing in gold.

332
00:15:38,760 --> 00:15:41,640
And we all know he invested in
gold and he's done very well.

333
00:15:41,640 --> 00:15:45,160
But he kind of popularized that
idea that gold.

334
00:15:45,160 --> 00:15:48,320
And I went to dinner that night,
Rothschild, I was still working

335
00:15:48,320 --> 00:15:49,880
at Rothschild.
I hosted a whole lot of crusty

336
00:15:49,880 --> 00:15:52,880
old gold miners and prospectors
and people that have done well

337
00:15:52,880 --> 00:15:54,360
and some of them are still
around today.

338
00:15:55,000 --> 00:15:57,760
And I said, OK, so PL.
Assange, you're all think it's

339
00:15:57,760 --> 00:15:59,480
fantastic.
He's bullish gold, but none of

340
00:15:59,480 --> 00:16:03,040
you believe the reason that he
thinks gold is bullish like this

341
00:16:03,160 --> 00:16:05,520
Dow gold.
You I'm I'm sure you don't like

342
00:16:05,600 --> 00:16:07,720
even get it.
So we, we explained it exactly

343
00:16:07,720 --> 00:16:09,200
what it was.
And I said, go around the table,

344
00:16:09,200 --> 00:16:12,160
everyone around the table.
What's your prediction for where

345
00:16:12,160 --> 00:16:14,040
the Dow gold ratio goes to 1:00
to 1:00?

346
00:16:14,200 --> 00:16:16,080
Because PL.
Asante had said, I believe the

347
00:16:16,080 --> 00:16:18,160
Dow gold ratio is going back to
1:00 to 1:00.

348
00:16:18,400 --> 00:16:23,160
From 35 to. 1 from 35 to 1 and
we had gold at like 300 and,

349
00:16:23,200 --> 00:16:25,760
and, and the Dow in the 10
thousands.

350
00:16:25,960 --> 00:16:27,640
Yeah.
Now the year I finished high

351
00:16:27,640 --> 00:16:30,720
school in 1980, it was 1 to 1.
The Dow was 800 and so was gold.

352
00:16:31,280 --> 00:16:32,880
So I'm going, well, it happened
in my lifetime.

353
00:16:32,880 --> 00:16:34,240
I I believe it can happen again.
Why?

354
00:16:34,320 --> 00:16:36,720
Why not?
So I'd gone up to PL. asond in

355
00:16:36,720 --> 00:16:39,480
the drinks in the in the tent
afterwards and said, I, I know

356
00:16:39,480 --> 00:16:41,880
you can't say, but 2 1/2
thousand.

357
00:16:42,680 --> 00:16:44,280
How's that for a number for one
to 1?

358
00:16:44,560 --> 00:16:46,320
He goes, oh, I, I think you're a
little bit low.

359
00:16:46,480 --> 00:16:48,200
Right.
So that that was the so then I'm

360
00:16:48,200 --> 00:16:50,680
at dinner with all these crusty
old prospectors and said, so

361
00:16:50,680 --> 00:16:53,600
everyone pick a number and we
ran around the table said,

362
00:16:53,600 --> 00:16:55,400
everyone pick the number that,
you know, don't change your

363
00:16:55,400 --> 00:16:55,960
mind.
Go around.

364
00:16:55,960 --> 00:16:59,280
And we went around the table and
everyone came out with like 4005

365
00:16:59,280 --> 00:17:02,200
thousand 6000.
Now in the gold is 300 at this

366
00:17:02,200 --> 00:17:05,079
time.
And I you're all full of crap.

367
00:17:05,280 --> 00:17:08,040
A whole lot of you like none of
you believe that the gold price

368
00:17:08,040 --> 00:17:10,160
is going to go to 5000.
If you did you behaving very

369
00:17:10,160 --> 00:17:12,760
differently than you are in the
current environment.

370
00:17:12,760 --> 00:17:15,280
That's why your game's so silly,
Sean, because the Dow can't go

371
00:17:15,280 --> 00:17:18,200
below 5000.
Like that was their limiting

372
00:17:18,200 --> 00:17:20,200
factor.
Their limiting factor was the

373
00:17:20,200 --> 00:17:23,800
stock market couldn't do more
than half.

374
00:17:24,440 --> 00:17:27,280
Therefore that was the number
they applied to gold on A1 for

375
00:17:27,280 --> 00:17:29,880
one.
But they go, yeah, but it's it's

376
00:17:29,880 --> 00:17:32,520
a lot of tosh anyway, right?
But they were happy that he was

377
00:17:32,520 --> 00:17:35,200
bullish.
The thing now is like, to your

378
00:17:35,200 --> 00:17:39,120
point, in 2008, the Dow gold
ratio fell quite dramatically

379
00:17:39,120 --> 00:17:41,720
from levels it's at right now,
the same levels it's at right

380
00:17:41,720 --> 00:17:47,000
now, like 11 1/2 or 12.
And it fell, the gold fell 30%

381
00:17:47,000 --> 00:17:51,240
in 2008 from that high, right?
But the Dow fell 50%.

382
00:17:51,560 --> 00:17:55,320
It fell from 14,000 to 7000.
It's hard to imagine that it's

383
00:17:55,320 --> 00:17:57,400
only that recently that the Dow
was at 7000.

384
00:17:57,400 --> 00:17:59,320
What's it at 47,000 or something
today?

385
00:18:00,440 --> 00:18:03,280
So, so if you think about it in
that context, that just reflects

386
00:18:03,280 --> 00:18:04,640
how much money there is in the
world.

387
00:18:04,640 --> 00:18:06,480
Gold is responding to.
There's more money.

388
00:18:06,520 --> 00:18:09,200
Like people are saying, you're
not going to have my oz for that

389
00:18:09,200 --> 00:18:10,960
many dollars when you print,
keep printing it.

390
00:18:10,960 --> 00:18:14,040
Like the people who actually
smart about this in, in Asia who

391
00:18:14,040 --> 00:18:16,600
own most of the gold, they go,
well, you know, you have to pay

392
00:18:16,600 --> 00:18:18,320
me a lot more to get my gold on
my hands.

393
00:18:18,320 --> 00:18:20,000
And I'm willing to pay more
because you just keep printing

394
00:18:20,000 --> 00:18:23,040
those dollars.
So 1 to 1 today is a fascinating

395
00:18:23,040 --> 00:18:25,000
thing.
Like we're 11.2 or something.

396
00:18:25,000 --> 00:18:28,400
Like where's 1:00 to 1:00 today?
Why?

397
00:18:28,560 --> 00:18:31,880
Why should?
Why should gold outperform

398
00:18:31,880 --> 00:18:33,400
general equities?
You know, you know what I mean?

399
00:18:33,400 --> 00:18:37,240
Like why, why aren't equities?
Well, equities are a a means of

400
00:18:37,240 --> 00:18:40,640
being long human ingenuity.
You know that we're reinvesting

401
00:18:40,640 --> 00:18:42,120
capital into productive
purposes.

402
00:18:42,120 --> 00:18:44,160
These businesses, they compound
and they can reinvest their

403
00:18:44,160 --> 00:18:45,760
capital and have growth
etcetera, etcetera.

404
00:18:45,880 --> 00:18:49,400
And presumably investing in an
index, you capture, you capture

405
00:18:49,400 --> 00:18:51,360
that, yeah.
And, and, and that was totally

406
00:18:51,360 --> 00:18:57,040
true from 1980 when it was at
1:00 to 1:00 until when PLS on

407
00:18:57,040 --> 00:19:00,880
set up in 2003 and it was 35 to
1.

408
00:19:00,880 --> 00:19:02,560
Like you were right, you were
much better off to be in the

409
00:19:02,560 --> 00:19:04,440
index than be gold in a couple
of decades.

410
00:19:04,440 --> 00:19:07,200
And that was fantastic.
But if you go back in history,

411
00:19:07,360 --> 00:19:10,720
it's gone from like 1 to 1 to 15
to one, one to 1 to 22 to one,

412
00:19:10,720 --> 00:19:13,000
one to one to.
It just seems that we can't help

413
00:19:13,000 --> 00:19:17,480
ourselves as humans that we over
invest or we go crazy or we get

414
00:19:17,480 --> 00:19:21,120
so carried away with money And
the way money works that gold

415
00:19:21,440 --> 00:19:23,400
then is this sort of
gravitational force where it's

416
00:19:23,400 --> 00:19:25,600
just something that is actually
very, you know, it's hard to

417
00:19:25,600 --> 00:19:28,040
produce, right?
Like a lot of effort and energy

418
00:19:28,040 --> 00:19:30,000
and ingenuity goes into every
ounce of gold.

419
00:19:30,640 --> 00:19:33,560
Now, if you believe that that
that ounce of gold stores that

420
00:19:33,560 --> 00:19:36,600
effort and ingenuity and at some
point in the future reflects a

421
00:19:36,600 --> 00:19:39,480
similar value, then that's all
gold is really doing.

422
00:19:39,480 --> 00:19:42,160
Let's say gold is just holding
the world to account or

423
00:19:42,160 --> 00:19:43,680
something, hard assets,
whatever.

424
00:19:44,040 --> 00:19:47,480
But I mean, I, yeah, I agree you
should be better off.

425
00:19:48,360 --> 00:19:51,440
You should be better off to be
able to invest your money in

426
00:19:51,480 --> 00:19:55,040
companies that, you know,
generate income and do good for

427
00:19:55,040 --> 00:19:57,120
the world and do all the rest of
it, right?

428
00:19:58,280 --> 00:20:00,480
But the reality is the last 20
years, there's very few things

429
00:20:00,480 --> 00:20:02,200
that you could have owned that
would have got you a better

430
00:20:02,200 --> 00:20:04,480
return than gold.
Even the fact that doesn't pay a

431
00:20:04,480 --> 00:20:05,600
dividend, that's just the
reality.

432
00:20:05,600 --> 00:20:08,880
It's outperformed equities has
outperformed all those things.

433
00:20:08,880 --> 00:20:10,920
But I guess the the more
important point is.

434
00:20:11,920 --> 00:20:15,440
When it is outperforming general
equities, a whole lot of people

435
00:20:15,440 --> 00:20:17,680
who hate it feel the need to buy
it.

436
00:20:18,200 --> 00:20:20,680
That would be the, that would be
the single most important

437
00:20:20,680 --> 00:20:24,680
observation that I have come to
or the realization I have come

438
00:20:24,680 --> 00:20:27,320
to our goal very late in my
career.

439
00:20:27,920 --> 00:20:30,000
You know, in a way like I saw
this before and I thought it was

440
00:20:30,000 --> 00:20:32,560
interesting and I can understand
why it might happen.

441
00:20:32,960 --> 00:20:36,720
But I, I think that if you look
at the flows, we spoke to our

442
00:20:36,720 --> 00:20:40,880
clients 18 months ago, we did a
big deep dive into gold and we

443
00:20:40,880 --> 00:20:44,680
said if the Dow gold ratio goes
below 16, if it goes below 16,

444
00:20:44,680 --> 00:20:46,320
we think there'll be fireworks
for gold.

445
00:20:46,880 --> 00:20:49,000
Why?
Because if it goes below 16, you

446
00:20:49,000 --> 00:20:50,920
look historically when it went
below and I can give you the

447
00:20:50,920 --> 00:20:52,480
chart if you want to put it in
the background of this.

448
00:20:52,480 --> 00:20:56,800
But when it's gone below 16 in
the past, kind of it, the world

449
00:20:56,800 --> 00:21:00,040
has just kind of the rivets of
the world economy have started

450
00:21:00,040 --> 00:21:02,120
to pop for whatever reason, it's
there.

451
00:21:02,120 --> 00:21:06,200
And so 2008, it was exactly the
same ratios is today.

452
00:21:06,200 --> 00:21:10,800
From 2008 to 2011, that ratio
fell to to five to to five.

453
00:21:10,800 --> 00:21:14,520
Sorry, it went down to five
having been up in the high 30s.

454
00:21:14,520 --> 00:21:16,640
Yeah.
And then QA kicks in, right?

455
00:21:16,680 --> 00:21:21,440
And a lot of the, yeah, the
money printing effect that has

456
00:21:21,440 --> 00:21:25,360
happened, it it, it, it put it
pushed asset prices up higher,

457
00:21:25,360 --> 00:21:27,160
but maybe not.
So much so it went back into

458
00:21:27,160 --> 00:21:29,920
assets at that point and assets
were cheap relative to gold and

459
00:21:29,920 --> 00:21:35,840
then you rolled back.
And so like in 2012, in 2012, we

460
00:21:35,840 --> 00:21:40,560
were saying to anyone that would
listen like that, that uptrend

461
00:21:41,080 --> 00:21:44,440
feels like it's over, right?
And and we had said all the gold

462
00:21:44,440 --> 00:21:46,320
producers that had bought back
all the hedging and used

463
00:21:46,320 --> 00:21:47,760
shareholders money to buy back
the hedging.

464
00:21:48,040 --> 00:21:50,880
We had kind of posited maybe
there was a $300 premium on the

465
00:21:50,880 --> 00:21:53,960
gold price for all the fact that
gold producers had been one of

466
00:21:53,960 --> 00:21:56,760
the largest buyers for the last
decade, right, in very high

467
00:21:56,760 --> 00:21:59,800
volumes, in very narrow windows
to do these buybacks like

468
00:21:59,800 --> 00:22:01,440
Newcrest and people like that,
right.

469
00:22:02,080 --> 00:22:05,320
So that's there.
And then we're going long term

470
00:22:05,320 --> 00:22:07,800
averages here, 200 week moving
averages here.

471
00:22:08,120 --> 00:22:10,600
You know, fair value is the line
that people draw in afterwards

472
00:22:10,600 --> 00:22:12,280
between overvaluation and
undervaluation.

473
00:22:12,280 --> 00:22:14,680
That's that's human nature again
and affecting markets.

474
00:22:14,680 --> 00:22:16,880
So we're going like we were
saying to people, we think, oh,

475
00:22:16,880 --> 00:22:18,880
it's 1850 and we're going, yeah,
1350.

476
00:22:18,880 --> 00:22:21,200
You should be planning for it to
go at least that low.

477
00:22:21,960 --> 00:22:24,640
And and it went, that's
ridiculous.

478
00:22:24,640 --> 00:22:26,760
It's never going there again.
Well, we all know it went to

479
00:22:26,760 --> 00:22:31,200
11:50, right?
But in 2013 when it collapsed

480
00:22:31,880 --> 00:22:36,440
and it really did collapse in
2013, we had a, we went from

481
00:22:36,440 --> 00:22:38,560
having a red background for a
very long period of time on the

482
00:22:38,560 --> 00:22:41,000
Dow Gold ratio charts, having a
green background.

483
00:22:41,720 --> 00:22:43,800
The the weekly score turned
positive and we're going, we

484
00:22:43,800 --> 00:22:47,600
don't know why, but now the
clear fund flows, right?

485
00:22:47,600 --> 00:22:50,160
That chart is just telling you
that people are now favouring

486
00:22:50,160 --> 00:22:54,040
equities over gold for the first
time in almost a decade.

487
00:22:55,600 --> 00:22:58,400
And it's safe to go back in the
water right now.

488
00:22:58,520 --> 00:23:01,680
Some years later.
I heard Barry Rithold's on

489
00:23:01,840 --> 00:23:07,600
Bloomberg on his, his podcast
that he does interview a fund

490
00:23:07,600 --> 00:23:11,200
manager from Jeremy Grantham
from GMO who one of the big, you

491
00:23:11,280 --> 00:23:13,040
know, famous bubble spotter,
Jeremy Grantham.

492
00:23:13,760 --> 00:23:17,320
And this guy's the chief
investment officer at Grantham.

493
00:23:17,320 --> 00:23:19,720
And one of Barry Rithold's last
questions is what do you think

494
00:23:19,720 --> 00:23:22,800
about gold?
And he says to the guy, what do

495
00:23:22,800 --> 00:23:26,400
you think about gold?
He said we hate it, we hate

496
00:23:26,400 --> 00:23:29,480
gold, can't value it.
You know, it doesn't work in

497
00:23:29,480 --> 00:23:31,960
your models, doesn't pay any
income.

498
00:23:31,960 --> 00:23:36,640
We hate it.
But he said in 2009 when it

499
00:23:36,640 --> 00:23:40,480
started to dramatically
outperform general equities, we

500
00:23:40,480 --> 00:23:43,600
just had to own it.
We just had to own it.

501
00:23:44,560 --> 00:23:49,360
And he said, and we held it
until Q three, 2012, when

502
00:23:49,360 --> 00:23:52,320
finally general equity started
to outperform gold again.

503
00:23:52,320 --> 00:23:55,120
And he said we were so happy
that we could go to the

504
00:23:55,120 --> 00:23:58,360
investment committee and get
permission to sell that gold.

505
00:23:58,760 --> 00:24:03,600
We'd owned it since 2009.
He said we couldn't wait to sell

506
00:24:03,600 --> 00:24:06,440
it.
And he said, Barry, the irony is

507
00:24:07,880 --> 00:24:11,440
we struggle to find any
investment over a three to four

508
00:24:11,440 --> 00:24:14,800
year period that we have ever
had that performed as well as

509
00:24:14,800 --> 00:24:19,800
gold during that period.
And yet we were so happy to sell

510
00:24:19,800 --> 00:24:20,560
it.
All right.

511
00:24:21,240 --> 00:24:25,160
And, and so I think that's a
really important thing because

512
00:24:25,600 --> 00:24:27,880
right now, I think that there
are people around the world that

513
00:24:27,880 --> 00:24:32,000
hate gold, that feel compelled
to own it because it's

514
00:24:32,000 --> 00:24:36,520
outperforming general equities.
And, and, but, but if you look

515
00:24:36,520 --> 00:24:39,520
at the evidence of like what
percentage of money invested in

516
00:24:39,520 --> 00:24:43,560
the Atfs, what percentage of
investor allocations you read

517
00:24:43,560 --> 00:24:46,400
Ronnie Starfall's stuff from
Gold, we trust even family

518
00:24:46,400 --> 00:24:50,480
officers who historically have
been investors in gold, they're

519
00:24:50,480 --> 00:24:52,080
hardly there.
So there's very little

520
00:24:52,080 --> 00:24:54,120
participation yet in in the
West.

521
00:24:54,760 --> 00:24:57,280
That's, that's such a
fascinating anecdote.

522
00:24:58,000 --> 00:25:01,560
I, I want to, I want to talk a
bit about momentum because it

523
00:25:01,560 --> 00:25:04,520
feels like the, you know, people
in, in, in gold equities.

524
00:25:04,520 --> 00:25:06,240
I'd love to talk about
generalists when a generalist

525
00:25:06,240 --> 00:25:07,880
can be paying attention.
When's the generalist money

526
00:25:07,880 --> 00:25:11,080
coming in?
And generalists is is a word

527
00:25:11,080 --> 00:25:13,440
that captures a lot of different
types of investors, but

528
00:25:13,440 --> 00:25:17,440
momentum, momentum investors are
absolutely in the gold equities.

529
00:25:17,560 --> 00:25:20,880
In fact, I'll share an anecdote
that I heard recently and that's

530
00:25:20,880 --> 00:25:25,280
that many of the managing
directors of gold companies,

531
00:25:26,160 --> 00:25:29,760
they're running their, their
quarterly or their earnings call

532
00:25:29,960 --> 00:25:34,440
like speech into into like a
like, you know, some, some quant

533
00:25:34,520 --> 00:25:37,880
AI software before their, before
their earnings call to

534
00:25:37,880 --> 00:25:41,760
understand how the how the quant
AIS, how, how quants are going

535
00:25:41,760 --> 00:25:43,840
to respond to this just based on
the language used.

536
00:25:44,040 --> 00:25:45,920
They might, they might change
some wording here or there to

537
00:25:45,920 --> 00:25:49,240
soften certain certain phrases.
So, you know the the stewards of

538
00:25:49,240 --> 00:25:53,160
capital of these like miners are
actually tailoring their own

539
00:25:53,280 --> 00:25:57,680
their own speeches of the
performance of their company to

540
00:25:58,080 --> 00:25:59,720
to the quants, to the momentum
chasers.

541
00:26:00,720 --> 00:26:07,120
Well, and, and if you know that
that's a thing and you're aware

542
00:26:07,120 --> 00:26:09,400
of it, I mean, I don't think
there's anything wrong in the

543
00:26:09,400 --> 00:26:12,320
short term with making sure that
you, you get your messaging

544
00:26:12,320 --> 00:26:13,960
right.
Short term is the keyword.

545
00:26:14,000 --> 00:26:15,400
Yeah, but but that, but that's
right.

546
00:26:15,400 --> 00:26:18,280
But, but, but you, you don't
want to be running.

547
00:26:18,280 --> 00:26:20,680
You might, you might mean by you
talk about your business in a

548
00:26:20,680 --> 00:26:22,720
way you think that they're going
to respond, but that's not the

549
00:26:22,720 --> 00:26:23,960
way you should be running your
business.

550
00:26:24,280 --> 00:26:26,200
You've got to be running your
business for the long term.

551
00:26:26,200 --> 00:26:29,640
And I think there's plenty of
evidence of that in my career of

552
00:26:29,640 --> 00:26:33,160
the people that have been
successful, very successful and

553
00:26:33,160 --> 00:26:37,360
built mining houses over long
periods of time have been the

554
00:26:37,360 --> 00:26:38,680
people who've had long term
plans.

555
00:26:38,680 --> 00:26:40,600
I mean, you take clients a
perfect example.

556
00:26:40,600 --> 00:26:42,840
You had a wonderful summary that
you did recently we were

557
00:26:42,840 --> 00:26:45,240
chatting about before we came on
air like it was great to hear

558
00:26:45,240 --> 00:26:47,440
that history again, but that
there's no accident in the

559
00:26:47,440 --> 00:26:51,360
success of evolution.
And, and they might be good at

560
00:26:51,360 --> 00:26:53,560
making announcements, but it
wasn't the tone of their

561
00:26:53,560 --> 00:26:56,960
announcements going into a, into
a software model that led to

562
00:26:56,960 --> 00:26:59,720
their ultimate success, right?
It was about the decisions they

563
00:26:59,720 --> 00:27:02,520
made and constantly improving
the business and creating the

564
00:27:02,520 --> 00:27:05,120
culture inside the business.
At the end of the day, because I

565
00:27:05,120 --> 00:27:07,920
think like a bit like Bill
Berman said years ago, like

566
00:27:08,560 --> 00:27:09,760
we're in the business of making
money.

567
00:27:09,760 --> 00:27:12,280
The way we choose to make money
is mining gold.

568
00:27:12,280 --> 00:27:13,760
I think that's the biggest
problem that you have in the

569
00:27:13,760 --> 00:27:16,960
gold mining industry, full stop.
As anyone that talks about the

570
00:27:16,960 --> 00:27:20,560
gold price, primarily as a gold
miner, I always kind of switch

571
00:27:20,560 --> 00:27:23,560
off because you go like, you
don't know where the gold price

572
00:27:23,560 --> 00:27:24,640
is going.
I don't know where the gold

573
00:27:24,640 --> 00:27:26,480
price is going.
I have a view at the moment I'm

574
00:27:26,480 --> 00:27:29,680
backing myself in terms of the
way I invest, but I want to hear

575
00:27:29,680 --> 00:27:31,480
how you're running the company,
how you're trying to get your

576
00:27:31,480 --> 00:27:33,360
costs down, how you're trying to
attract the best talent.

577
00:27:33,360 --> 00:27:35,360
What's your like?
What's your strategy, right?

578
00:27:35,360 --> 00:27:37,680
Because that's at the end of the
day is more important.

579
00:27:37,680 --> 00:27:40,800
When people start talking about
the gold, the gold mining

580
00:27:40,800 --> 00:27:44,120
companies start talking about
the gold price, I actually start

581
00:27:44,120 --> 00:27:47,520
to worry.
On, on that kind of point, we, I

582
00:27:47,880 --> 00:27:50,720
think we spoke on the phone a
little while ago and shared a

583
00:27:50,720 --> 00:27:53,680
few thoughts about how gold
miners in this day and age are

584
00:27:53,680 --> 00:27:55,360
starting to keep a bit more gold
on the balance sheet.

585
00:27:55,360 --> 00:27:56,920
What what are your thoughts on
on that?

586
00:27:57,240 --> 00:28:01,120
I don't understand that.
Yeah.

587
00:28:01,200 --> 00:28:05,840
Like, you're making so much,
you're making enough money in

588
00:28:05,840 --> 00:28:11,280
the gold mining business that
you're going to accumulate gold

589
00:28:11,280 --> 00:28:14,600
bars.
What for?

590
00:28:15,680 --> 00:28:19,000
Well, shouldn't you, shouldn't
you be you're, you're, you're

591
00:28:19,000 --> 00:28:21,600
structurally short gold as a
gold miner, yes, you're, you're

592
00:28:21,600 --> 00:28:23,600
operationally leverage the gold
brass because you make more

593
00:28:23,600 --> 00:28:25,920
money as the gold brass goes up,
but you're supposed to sell that

594
00:28:25,920 --> 00:28:27,720
for cash.
Now if you if you just sold

595
00:28:27,720 --> 00:28:30,760
enough to maintain your own
liquidity purposes, cover costs,

596
00:28:30,760 --> 00:28:35,280
etcetera, like then you're not a
more pure reflection of of being

597
00:28:35,560 --> 00:28:38,520
long the commodity you're
supposed to be producing anyway.

598
00:28:38,520 --> 00:28:43,000
If you don't have any like
organic organic returns that are

599
00:28:43,040 --> 00:28:45,040
are going to be superior organic
uses of that capital.

600
00:28:45,040 --> 00:28:49,480
That could be superior if if you
if you told me that someone was

601
00:28:49,520 --> 00:28:56,680
only selling enough gold they
produce to pay their staff and

602
00:28:56,680 --> 00:29:01,320
to pay their bills just and not
selling any other gold, I go,

603
00:29:02,040 --> 00:29:10,960
OK, high risk strategy, but at
least you're kind of like you,

604
00:29:11,080 --> 00:29:14,200
you, you're full in like you,
you know, you, you, you're OK.

605
00:29:14,200 --> 00:29:16,480
You're saying this is the people
bias for this kind of leverage.

606
00:29:16,480 --> 00:29:21,400
But my question still is, at
what point do you do you sell

607
00:29:21,400 --> 00:29:22,600
that?
Like when do you change your

608
00:29:22,600 --> 00:29:23,760
mind?
Because otherwise you're just

609
00:29:23,760 --> 00:29:25,280
going to go up and over and out
the other side.

610
00:29:25,280 --> 00:29:28,080
And you know, like this, the
markets, market goes up, market

611
00:29:28,080 --> 00:29:30,640
goes down, you know, and if you
don't know where it's going,

612
00:29:30,640 --> 00:29:34,320
like I prefer the guy who says
we're in the business of mining

613
00:29:34,320 --> 00:29:37,280
gold at a profit, giving that
money to you and letting you

614
00:29:37,280 --> 00:29:38,800
decide.
So when if someone just says

615
00:29:38,800 --> 00:29:41,000
we're going to put a little bit
of money on the side and

616
00:29:41,000 --> 00:29:43,760
accumulate some gold bars, I say
give that back to shareholders

617
00:29:43,760 --> 00:29:47,000
and let them decide if they want
to own gold or they want to do

618
00:29:47,000 --> 00:29:48,600
that.
I don't, I think you're, you're

619
00:29:48,680 --> 00:29:51,920
you're a tin ear playing, you're
listening to a tin whistle from

620
00:29:51,920 --> 00:29:55,200
Canada and you're kind of trying
to play the ball to feed to

621
00:29:55,200 --> 00:29:58,720
certain people in the industry.
But I don't think you're doing

622
00:29:58,720 --> 00:30:00,040
your shareholders a great
service.

623
00:30:00,160 --> 00:30:04,080
Do you know any like like any
any private individuals?

624
00:30:04,080 --> 00:30:06,800
Hyper wealthy individuals are
privately owned.

625
00:30:07,400 --> 00:30:09,480
Owned a gold mine.
Yeah, so the Smorgan family

626
00:30:09,480 --> 00:30:11,280
owned a gold mine.
Interesting all Will.

627
00:30:11,360 --> 00:30:13,960
Yeah, yeah.
So, so yeah, there's a, there's

628
00:30:13,960 --> 00:30:18,920
a, a couple I can think of and
they all do the strategy of

629
00:30:19,000 --> 00:30:20,680
hoarding all of the gold that
they produce.

630
00:30:21,520 --> 00:30:24,840
Well, I, I, I mean, again, like
I, I've only, what I know, I've

631
00:30:24,840 --> 00:30:26,840
read in the paper, there was a
period of time, I believe where,

632
00:30:26,880 --> 00:30:29,360
yes, that's, you know, they were
just saying, well, we can, if we

633
00:30:29,360 --> 00:30:31,880
can produce gold cheaper than we
can buy it, why wouldn't we do

634
00:30:31,880 --> 00:30:33,800
that?
I think I think a lot of times,

635
00:30:33,880 --> 00:30:36,760
not just being making a general
comment, I think a lot of times

636
00:30:36,760 --> 00:30:40,560
people who are gold investors
start getting involved in gold

637
00:30:40,560 --> 00:30:43,960
mining, understand just how
tough it is and just the cost of

638
00:30:43,960 --> 00:30:46,800
continuing to replace reserves
and resources and wish that they

639
00:30:46,800 --> 00:30:49,400
just bought gold bars.
You know, like, I mean, I don't

640
00:30:49,400 --> 00:30:52,080
think owning a gold mines
everything that's cracked up to

641
00:30:52,080 --> 00:30:53,760
be for a lot of people.
Do, you know, do you know what I

642
00:30:53,760 --> 00:30:54,840
mean?
Like, yeah, I can produce it

643
00:30:54,840 --> 00:30:57,240
cheaper than I can buy it, but
all the other obligations and

644
00:30:57,240 --> 00:30:59,240
things, it's hard.
Like it's really one of the

645
00:30:59,240 --> 00:31:02,000
reasons gold is valuable and
will I think hold its value over

646
00:31:02,000 --> 00:31:06,280
time is that gold mining is
incredibly tough.

647
00:31:06,360 --> 00:31:10,200
You know, a lot of smarts and a
lot of technology improvements

648
00:31:10,200 --> 00:31:12,200
and things, you know, as the
grades have come down to do

649
00:31:12,200 --> 00:31:14,800
that.
And so, yeah, I, I mean, I think

650
00:31:14,800 --> 00:31:17,000
there are easier ways.
I mean, I'd much prefer to rent,

651
00:31:17,560 --> 00:31:20,000
access the gold by buying gold
shares and then being able to

652
00:31:20,000 --> 00:31:22,800
sell them at a moment's notice.
You know, if you, if you change

653
00:31:22,800 --> 00:31:25,280
your mind as an investor, that's
the luxury that we have, right?

654
00:31:25,280 --> 00:31:29,080
That's very different to to to
to the managers of those

655
00:31:29,080 --> 00:31:32,560
companies.
Sean, if we if we jump back

656
00:31:32,600 --> 00:31:35,120
again quickly a lot, a lot of
the people thinking about like

657
00:31:35,120 --> 00:31:38,280
where the gold price goes from
here, they're thinking about

658
00:31:38,280 --> 00:31:41,080
very big kind of trends.
They're the stuff that Ray Dalio

659
00:31:41,080 --> 00:31:44,360
kind of talks about the end of
cycles, the US dollar in this

660
00:31:44,360 --> 00:31:47,480
moment in time.
Not many people compare it to

661
00:31:47,480 --> 00:31:50,480
what happened with the US dollar
between 2000 and 2010.

662
00:31:50,480 --> 00:31:53,320
A lot of people go and think
about what happened to the pound

663
00:31:53,320 --> 00:31:55,880
or the the Gilda, these sorts of
things.

664
00:31:56,680 --> 00:31:58,640
How do you think about a lot of
those things in the in the

665
00:31:58,640 --> 00:32:00,640
context?
Because it's way harder to get

666
00:32:00,640 --> 00:32:03,080
good data and those things, it's
much easier to look at the last

667
00:32:03,080 --> 00:32:04,920
50 years and think about what's
happened.

668
00:32:04,920 --> 00:32:06,160
But I know you love financial
history.

669
00:32:06,160 --> 00:32:07,960
I know you think about these
things a lot.

670
00:32:07,960 --> 00:32:10,600
How do you sort of piece
together random thoughts on on

671
00:32:10,600 --> 00:32:12,160
that subject?
One random thought I had

672
00:32:12,160 --> 00:32:15,280
recently was Hedley Widow, who I
know he's been on the show a

673
00:32:15,280 --> 00:32:17,240
number of times.
And you know, he gave a great

674
00:32:17,240 --> 00:32:19,400
presentation recently and
someone asked him, he found

675
00:32:19,400 --> 00:32:21,600
himself on a panel as you do,
you get asked questions you'd

676
00:32:21,600 --> 00:32:23,360
rather not be asked.
And someone said, what do you

677
00:32:23,360 --> 00:32:26,920
think about Bitcoin?
And Headley goes come back in 50

678
00:32:26,920 --> 00:32:32,440
years and, and, and you know, he
said, like, got to give it time.

679
00:32:32,440 --> 00:32:35,200
It's brand new.
And and it just dawned on me and

680
00:32:35,200 --> 00:32:36,400
I was chatting to him later in
the day.

681
00:32:36,400 --> 00:32:40,640
I said, well, it's funny because
it's like when they stopped the

682
00:32:40,640 --> 00:32:43,720
convertibility of gold in the
early 70s, someone said, how do

683
00:32:43,720 --> 00:32:45,840
you think this is going to work?
You know, how do you think this

684
00:32:45,840 --> 00:32:47,320
is going to work?
That no currency in the world

685
00:32:47,320 --> 00:32:48,960
for the first time in the
history of the world is not

686
00:32:48,960 --> 00:32:51,000
linked to gold in some way.
It's all just paper money.

687
00:32:52,160 --> 00:32:55,760
Someone go well, come back in 50
years and you know, we're at the

688
00:32:55,760 --> 00:32:57,840
50 year, we're at that kind of
50 year mark, right?

689
00:32:57,840 --> 00:33:01,200
And to some extent Bitcoin came
on on the scene a bit close to

690
00:33:01,200 --> 00:33:03,560
the 50 year mark is like the
next the next go round or

691
00:33:03,560 --> 00:33:04,720
someone's going to have a crack
at it.

692
00:33:04,720 --> 00:33:07,760
So, like, you look back and all
those different things in

693
00:33:07,760 --> 00:33:11,080
various times up until the 70s,
one currency in the world, at

694
00:33:11,080 --> 00:33:12,800
least one currency was always
linked to gold.

695
00:33:13,600 --> 00:33:16,160
And so there's long periods of
time, like I think in Japan and

696
00:33:16,160 --> 00:33:18,480
China, where people would use
the currency of the other

697
00:33:18,480 --> 00:33:20,400
country because it was more
sound.

698
00:33:20,920 --> 00:33:23,000
And there's a law and I can't
remember the law, but there's a

699
00:33:23,000 --> 00:33:26,560
law where, you know, good money
drives, you know, like bad money

700
00:33:26,560 --> 00:33:29,360
drives, drives out good money in
the sense that people spend the

701
00:33:29,360 --> 00:33:30,640
bad money and hoard the good
money.

702
00:33:30,640 --> 00:33:33,360
And so the good money disappears
off the scene, right.

703
00:33:33,360 --> 00:33:35,960
So people, you know, they'll,
they'll, that currency that's

704
00:33:35,960 --> 00:33:38,160
better, they will accumulate.
One of the things that I learned

705
00:33:38,160 --> 00:33:42,920
about gold fairly early on, it
was in Asia, the idea that, you

706
00:33:42,920 --> 00:33:45,680
know, people were accumulating
gold, they never saved, really

707
00:33:45,680 --> 00:33:47,880
never saved cash, if you like,
it was always gold.

708
00:33:48,360 --> 00:33:51,800
And until they introduced
foreign currency passbooks in

709
00:33:51,800 --> 00:33:54,240
Hong Kong for the first time,
they changed the rules where

710
00:33:54,240 --> 00:33:57,440
people could, could, could buy
foreign currency.

711
00:33:57,440 --> 00:33:59,480
So before you had a foreign,
before it was easy to buy

712
00:33:59,480 --> 00:34:02,200
foreign currencies, your average
Hong Kong person would have a

713
00:34:02,200 --> 00:34:05,280
little red book, little passbook
and they would accumulate gold

714
00:34:05,280 --> 00:34:07,480
like an ETF.
But they would go down the bank

715
00:34:07,480 --> 00:34:09,199
and they would hand over their
Hong Kong dollars that they were

716
00:34:09,199 --> 00:34:11,400
saving every month.
And they would get so many tails

717
00:34:11,400 --> 00:34:14,199
of gold that the unit of measure
and they would have a passbook.

718
00:34:14,199 --> 00:34:16,239
And it was like the the gold
ETF.

719
00:34:16,639 --> 00:34:17,880
And that was where all the money
went.

720
00:34:17,880 --> 00:34:20,280
They all just accumulated gold.
And then they'd had a bit of a

721
00:34:20,280 --> 00:34:23,000
liberalization and all of a
sudden they could buy Aussie

722
00:34:23,000 --> 00:34:27,719
dollars and earning 14% interest
or Kiwi and earning 16% or

723
00:34:27,719 --> 00:34:30,280
whatever.
Canada And what I learned is

724
00:34:30,280 --> 00:34:33,719
that the Aussie used to go up on
payday in Hong Kong.

725
00:34:34,080 --> 00:34:36,360
Like I heard this interview
about this guy would like it

726
00:34:36,360 --> 00:34:38,239
would be Hong Kong payday for
the fish markets.

727
00:34:38,239 --> 00:34:39,800
Or you know, there'd be a
certain day where a lot of

728
00:34:39,800 --> 00:34:42,080
people got paid and the traders
all knew that the currencies

729
00:34:42,080 --> 00:34:44,239
would go up that day because
everyone would go down the bank

730
00:34:44,239 --> 00:34:46,840
and convert everything that they
weren't going to be spending

731
00:34:46,840 --> 00:34:49,040
into that foreign currency.
Now, why did they do that?

732
00:34:49,120 --> 00:34:50,719
Because they wanted to get their
money offshore.

733
00:34:50,880 --> 00:34:53,960
They wanted to essentially get
protection from the degradation

734
00:34:53,960 --> 00:34:56,960
of their local currency, but
they had made a decision.

735
00:34:56,960 --> 00:34:58,640
Plus, plus gold price is now
falling.

736
00:34:58,640 --> 00:35:01,240
So we're in the 80s.
So gold's not doing it for them.

737
00:35:01,800 --> 00:35:04,040
And and they're earning 11 or
12%.

738
00:35:04,040 --> 00:35:06,320
They're getting paid enough to
be willing to take the risk that

739
00:35:06,320 --> 00:35:08,640
the Aussie dollar might fall.
You know, they're getting paid

740
00:35:08,640 --> 00:35:11,040
double digit interest rates.
So they're accumulating.

741
00:35:11,080 --> 00:35:13,080
I don't know, talking to my
colleagues in Singapore about

742
00:35:13,080 --> 00:35:15,520
this, I said, you guys, they go,
yeah, well, what if it, what are

743
00:35:15,520 --> 00:35:17,320
the Aussie dollar collapses?
Well, that's where my kids going

744
00:35:17,320 --> 00:35:19,760
to uni.
You know, I'll just take all

745
00:35:19,760 --> 00:35:21,720
those savings and I'll buy a
house and I'll send my kid there

746
00:35:21,720 --> 00:35:24,840
like.
But it was all about protection

747
00:35:24,840 --> 00:35:27,360
of your kind of getting your
money out of the system because

748
00:35:27,360 --> 00:35:30,800
the one thing that gold does to
you, what gold does for you in

749
00:35:30,800 --> 00:35:32,960
any country, that if you buy
gold, you're short your local

750
00:35:32,960 --> 00:35:35,720
currency, you know, so you've
essentially got your money

751
00:35:35,720 --> 00:35:37,640
offshore.
You've managed to get your money

752
00:35:37,680 --> 00:35:40,160
out of the system without
getting out of sense because

753
00:35:40,160 --> 00:35:43,480
your currency collapses.
The, the local currency price of

754
00:35:43,480 --> 00:35:49,280
your commodity will go up.
The, the, the, the queues at ABC

755
00:35:49,280 --> 00:35:53,520
in recent weeks reminded me of
during the Asian financial

756
00:35:53,520 --> 00:35:55,280
crisis when they, when they
first started talking about the

757
00:35:55,280 --> 00:35:57,280
Asian financial crisis, the
first reaction was the gold

758
00:35:57,280 --> 00:35:59,680
price went up and it was all
people in the West.

759
00:35:59,960 --> 00:36:03,840
So crisis and they bought gold.
The Asian financial crisis

760
00:36:03,840 --> 00:36:06,840
ended, rupee collapsed, the Thai
baht collapsed, all these

761
00:36:06,840 --> 00:36:09,040
things, right?
People were geared, people had

762
00:36:09,040 --> 00:36:10,640
borrowed money to buy property
and stuff like that.

763
00:36:10,640 --> 00:36:12,800
So there were some people in the
communities there that were

764
00:36:12,800 --> 00:36:16,080
really hurting, but the gold
price in those currencies was

765
00:36:16,080 --> 00:36:19,640
going through the roof.
Why do people in Asia own gold?

766
00:36:19,640 --> 00:36:23,360
They own gold or a crisis, they
don't queue up in the middle of

767
00:36:23,360 --> 00:36:26,200
a crisis to buy it.
They were they were selling it,

768
00:36:26,320 --> 00:36:27,560
right?
They were and they were like,

769
00:36:27,840 --> 00:36:29,320
hang on.
That property has fallen in

770
00:36:29,320 --> 00:36:31,880
value in rupee terms.
My gold in rupee terms has gone

771
00:36:31,880 --> 00:36:32,960
up.
I'm going to sell the gold and

772
00:36:32,960 --> 00:36:35,480
buy the property.
That's an acceptable switch out

773
00:36:35,480 --> 00:36:37,920
of gold into some other hard
asset, right?

774
00:36:37,920 --> 00:36:39,680
More risk because it's domestic,
but it's there.

775
00:36:40,520 --> 00:36:44,080
Gold refineries around the world
in the two years AF were like

776
00:36:44,080 --> 00:36:46,920
full, I think for nearly two
years after the Asian financial

777
00:36:46,920 --> 00:36:52,560
crisis with scrap that was
disgorged from Thailand, from

778
00:36:52,560 --> 00:36:57,040
Indonesia, from those places,
people that had stacked gold for

779
00:36:57,040 --> 00:36:59,480
years, to use your Western term,
right, they were stackers.

780
00:36:59,480 --> 00:37:02,280
They were just savers.
That crisis came.

781
00:37:02,280 --> 00:37:04,480
That was what protected them
from the crisis.

782
00:37:04,480 --> 00:37:07,960
That's what protected them from
the degraded, the collapse of

783
00:37:07,960 --> 00:37:10,040
their local currencies versus
the US dollar.

784
00:37:10,520 --> 00:37:12,880
And so they took advantage of
that and they either switched it

785
00:37:12,880 --> 00:37:14,920
into other hard assets like
property, whatever, or they used

786
00:37:14,920 --> 00:37:17,600
it to survive or to pay off the
debt or did what they did, but

787
00:37:17,600 --> 00:37:20,040
they accumulated for that
purpose.

788
00:37:20,440 --> 00:37:22,520
And I think today is a really
interesting thing.

789
00:37:22,520 --> 00:37:25,680
It's still the case that they're
buying it in the East and they

790
00:37:25,680 --> 00:37:27,760
don't trust paper money.
They never have in my working

791
00:37:27,760 --> 00:37:30,560
life, whereas for most of my
working life, people in the West

792
00:37:30,560 --> 00:37:33,600
have trusted paper money.
You know, I'd say to my mates,

793
00:37:33,800 --> 00:37:35,720
you're sure you should lend
money to you give money to your

794
00:37:35,720 --> 00:37:37,200
kids to buy a house.
If they can't afford the

795
00:37:37,200 --> 00:37:38,960
deposit, Are you sure they can
afford to buy the house?

796
00:37:38,960 --> 00:37:42,080
Or what if interest rates go
back up to 10% or the government

797
00:37:42,080 --> 00:37:43,600
11?
Never let them, never let that

798
00:37:43,600 --> 00:37:45,040
happen.
You know, there's this view that

799
00:37:45,320 --> 00:37:47,080
someone will bail you out.
Someone will do it.

800
00:37:47,160 --> 00:37:49,800
Like, we've got that faith here.
We haven't seen, we haven't

801
00:37:49,800 --> 00:37:52,600
lived through the basement that
developing countries.

802
00:37:52,600 --> 00:37:54,040
No, no, that's right.
Now they have.

803
00:37:54,040 --> 00:37:55,840
And so that so they're always
there.

804
00:37:55,840 --> 00:37:58,000
That's always their choice.
That's that's what they do

805
00:37:58,000 --> 00:37:59,720
right.
But like, I think I've said this

806
00:37:59,720 --> 00:38:04,120
to you guys before, but in about
1987, I remember talking to this

807
00:38:04,120 --> 00:38:06,360
old guy at Rothschild, Bob Guy
was his name.

808
00:38:06,360 --> 00:38:07,840
He was the chairman of the
London gold market.

809
00:38:08,080 --> 00:38:10,440
When I say old guy, I look back
on it now and he's probably 20

810
00:38:10,440 --> 00:38:11,760
years younger than than I am
today.

811
00:38:12,320 --> 00:38:15,800
But he, he was an old guy to me.
And I said, he said, well, what,

812
00:38:15,800 --> 00:38:17,600
what a by God, I don't
understand it.

813
00:38:17,600 --> 00:38:20,000
Like I, I just used to short
sell gold and buy it back later.

814
00:38:20,000 --> 00:38:22,040
I was, you know, like I'm a bear
market baby.

815
00:38:22,040 --> 00:38:24,240
The 1st 20 years of my life goal
was pretty much falling most of

816
00:38:24,240 --> 00:38:27,760
the time.
And he goes, Sean, it's nobody

817
00:38:27,760 --> 00:38:30,600
else's liability.
And I remember thinking what I

818
00:38:30,600 --> 00:38:33,520
probably the equivalent, like,
OK, boomer, you know, it wasn't

819
00:38:33,520 --> 00:38:34,600
in that term, wasn't invented
there.

820
00:38:34,600 --> 00:38:37,240
But I'm like, what the hell does
that mean today?

821
00:38:37,240 --> 00:38:42,240
That's exactly the best way to
describe why the change in gold.

822
00:38:42,240 --> 00:38:44,720
Nobody else's liability.
Should mean you physically store

823
00:38:44,720 --> 00:38:47,160
it.
Well, yes, yeah, that, that's

824
00:38:47,240 --> 00:38:48,120
right.
There's all those issues.

825
00:38:48,120 --> 00:38:50,200
But it is that kind of thing
that like, I think the world,

826
00:38:50,200 --> 00:38:52,640
the rest of the world is waking
up to the fact that all the

827
00:38:52,640 --> 00:38:56,840
politicians have have kind of
given up on trying to be

828
00:38:56,840 --> 00:38:58,600
fiscally responsible or do
whatever.

829
00:38:58,600 --> 00:39:00,480
I mean, you talked about Ray
Dalio a minute ago.

830
00:39:00,480 --> 00:39:02,680
I saw that he went to Washington
and he was kind of like, you

831
00:39:02,680 --> 00:39:06,160
know, sermonizing to both sides
of the House about the crisis

832
00:39:06,160 --> 00:39:08,160
that's coming.
And the overwhelming response he

833
00:39:08,160 --> 00:39:11,080
got was, yeah, we know.
We know, right?

834
00:39:11,080 --> 00:39:12,040
We understand.
It's.

835
00:39:12,080 --> 00:39:14,400
A pretty damning claim.
But, but, but, but, they're all

836
00:39:14,400 --> 00:39:17,280
going right.
We get it, But if we try to do

837
00:39:17,280 --> 00:39:19,840
the things that are required to
solve that, we'll get voted out

838
00:39:19,840 --> 00:39:22,200
of office.
The So we need a crisis.

839
00:39:22,280 --> 00:39:25,080
We're only going to solve this
by we need to have the crisis

840
00:39:25,080 --> 00:39:28,320
and then the population will
accept what comes next.

841
00:39:28,320 --> 00:39:31,560
I mean that that's a pretty
jaundice view of the world.

842
00:39:31,560 --> 00:39:34,200
But in the meantime, people are
queuing up and maybe not the

843
00:39:34,200 --> 00:39:36,120
right week to do it, but they're
queuing up to buy gold.

844
00:39:36,120 --> 00:39:37,920
They're trying to like protect
themselves.

845
00:39:37,920 --> 00:39:42,200
They kind of see in in one sense
what's happening all around

846
00:39:42,200 --> 00:39:43,960
them.
But you know, this idea of the

847
00:39:43,960 --> 00:39:46,640
Great reset, you know, this,
this stuff on there, you know

848
00:39:46,640 --> 00:39:48,760
that one day you've got to be
long gold now, because one day

849
00:39:48,760 --> 00:39:51,320
the government in the US is just
going to revalue gold to some

850
00:39:51,320 --> 00:39:52,520
level and we're all going to
make money.

851
00:39:53,040 --> 00:39:55,520
That would be the biggest free
kick to China and India and

852
00:39:55,520 --> 00:39:57,560
Thailand and Indonesia that they
could ever do.

853
00:39:57,560 --> 00:40:00,640
Like imagine that you would
devalue the US dollar against

854
00:40:00,640 --> 00:40:03,440
gold in that way and all the
holders of gold in the rest of

855
00:40:03,440 --> 00:40:07,080
the world, just you would give
them all this massive.

856
00:40:07,080 --> 00:40:10,120
I mean, you can't do it, I mean.
That hardly anyone in America

857
00:40:10,640 --> 00:40:13,240
owns gold as a private asset,
but all through Asia, they're

858
00:40:13,240 --> 00:40:15,960
huge holders of gold.
So I mean, Asia's getting

859
00:40:15,960 --> 00:40:18,400
wealthier and wealthier by the
week.

860
00:40:18,400 --> 00:40:21,000
I mean, one of the things that's
interesting right now is Chinese

861
00:40:21,000 --> 00:40:23,000
equities, which most people in
the West say are totally

862
00:40:23,000 --> 00:40:24,400
uninvestable.
They've never been cheaper

863
00:40:24,400 --> 00:40:27,320
relative to the local gold price
in the last 25 years.

864
00:40:27,320 --> 00:40:30,280
They are right now.
So to come to the ratios issue,

865
00:40:30,280 --> 00:40:33,960
like if you're in China right
now, pay this price for gold and

866
00:40:33,960 --> 00:40:36,240
they've just introduced the VAT
on jewellery to make it a bit

867
00:40:36,240 --> 00:40:38,680
harder.
Or do you buy equities like

868
00:40:38,680 --> 00:40:40,920
you've just broken out of a 10
year sideways trading range in

869
00:40:40,920 --> 00:40:45,040
China and you go, all right, all
right, I seems to be pretty

870
00:40:45,040 --> 00:40:47,480
good.
Seem to be a little bit ahead in

871
00:40:47,480 --> 00:40:49,560
this rare earths thing.
Maybe we should be buying our

872
00:40:49,560 --> 00:40:53,200
own companies, you know, like,
so you know, it's Chinese might

873
00:40:53,200 --> 00:40:55,760
buy equities instead of gold.
Indians are buying silver

874
00:40:55,800 --> 00:40:57,880
instead of gold because the
ratio is so high.

875
00:40:57,880 --> 00:41:00,640
So you know that it's that thing
of like people just trying to

876
00:41:00,640 --> 00:41:03,040
put their money in another
bucket, but they're all still

877
00:41:03,040 --> 00:41:05,560
trying to do it to get ahead.
This is This is why financial

878
00:41:05,560 --> 00:41:07,520
markets are so interesting.
I mean, everything we've spoken

879
00:41:07,520 --> 00:41:10,520
about is just human behavior
from from the trends to the

880
00:41:10,520 --> 00:41:13,160
behavior of how people save
treat debt across different

881
00:41:13,160 --> 00:41:15,880
currencies.
On on the topic of ratios and

882
00:41:15,880 --> 00:41:18,320
other ratios, and you touched on
on silver there, which is

883
00:41:18,320 --> 00:41:20,480
actually 1.
The old American doesn't mind

884
00:41:20,480 --> 00:41:23,400
passing away a bit of silver.
A bit more than gold, as I

885
00:41:23,400 --> 00:41:25,040
understand.
Yeah, poor man, poor man, Scott,

886
00:41:25,040 --> 00:41:27,440
I mean, we lost the silver
market, lost a lot of fun and a

887
00:41:27,440 --> 00:41:29,800
lot of volatility when a lot of
the tin hat people used to love

888
00:41:29,800 --> 00:41:32,240
silver went to the Bitcoin
market And the good news, they

889
00:41:32,240 --> 00:41:34,640
made a lot of money over there.
So if they, I mean, I was, I was

890
00:41:34,640 --> 00:41:35,800
talking to a matter of my living
mate.

891
00:41:35,800 --> 00:41:38,920
As I said, imagine if all those
people who went to Bitcoin left

892
00:41:38,920 --> 00:41:40,800
silver, Bitcoin decided to come
back to silver.

893
00:41:40,800 --> 00:41:42,560
It could get very interesting.
You know, why not?

894
00:41:42,560 --> 00:41:46,080
I mean, silver's the only metal
that in that is just in the last

895
00:41:46,080 --> 00:41:48,720
couple of weeks surpassed its
1980 high.

896
00:41:49,000 --> 00:41:51,040
It's the only metal that hadn't
done that.

897
00:41:51,400 --> 00:41:57,560
And gold surpassed its 1980
high, what, in 2000 and six,

898
00:41:57,560 --> 00:42:00,960
2007 sometime right there.
So gold's been 20 years above in

899
00:42:00,960 --> 00:42:03,240
inflation adjusted terms
depending on which inflation

900
00:42:03,240 --> 00:42:04,800
rate you use.
It's only in the last couple of

901
00:42:04,800 --> 00:42:08,320
quarters that gold actually just
beat it's inflation adjusted

902
00:42:08,320 --> 00:42:10,680
high from 1980.
Silver to do that would have to

903
00:42:10,680 --> 00:42:13,560
be 200 or 250 or something like
that.

904
00:42:13,560 --> 00:42:16,080
Silver probably takes the award
for the best financial story

905
00:42:16,080 --> 00:42:18,320
what happened in 1980 there as
well, which I'm I'm sure you

906
00:42:18,320 --> 00:42:18,680
know the.
Data.

907
00:42:18,760 --> 00:42:20,360
Oh yeah, like.
There's not many things in

908
00:42:20,360 --> 00:42:22,720
financial history that that
trump what happened in that?

909
00:42:22,720 --> 00:42:25,520
Era, No, that's right.
And of course that the the Hunt

910
00:42:25,600 --> 00:42:28,320
brothers and whatever took it up
to levels that you go, OK,

911
00:42:28,320 --> 00:42:31,800
without them, what would the
high of silver been at the time?

912
00:42:31,800 --> 00:42:32,880
I I don't know.
But yeah.

913
00:42:32,880 --> 00:42:34,920
So a market that's that
corrupted.

914
00:42:35,120 --> 00:42:36,960
It takes a long time to recover,
but that's another thing.

915
00:42:36,960 --> 00:42:39,160
I think it's always worth.
And again, it's like charts.

916
00:42:40,080 --> 00:42:43,920
You see a parabolic rise.
That's great when you're on it,

917
00:42:44,800 --> 00:42:49,800
but the minute a parabolic rise
ends and, and, and you could go

918
00:42:49,800 --> 00:42:54,160
through a string of them when,
when markets go parabolic, they

919
00:42:54,160 --> 00:42:57,760
bring into the world that, that
expression, you know, like

920
00:42:57,760 --> 00:42:59,720
nothing cures high prices faster
than high prices.

921
00:42:59,720 --> 00:43:02,280
Like, you know, ultimately when
you're at the end of a parabolic

922
00:43:02,280 --> 00:43:05,680
rise, you go like that market's
probably going to retrace 75 to

923
00:43:05,680 --> 00:43:09,720
85% and it's probably dead for
10 years like that.

924
00:43:09,720 --> 00:43:12,680
That's kind of you look at
silver, you look at gold in the

925
00:43:12,680 --> 00:43:16,280
1980s, you look at nickel in
2006 or whatever went from 10 to

926
00:43:16,280 --> 00:43:19,600
50.
You look at the NASDAQ lithium

927
00:43:20,520 --> 00:43:24,520
more recently telling people
that near the highs of lithium

928
00:43:24,520 --> 00:43:26,880
that it could retrace 80, you
know, it's a parabolic rise and

929
00:43:27,120 --> 00:43:30,880
expect it to retrace 80 to 85%.
This young sales guy from a

930
00:43:31,040 --> 00:43:33,160
lithium company was like, oh,
that you haven't been to China

931
00:43:33,160 --> 00:43:34,120
lately.
That's impossible.

932
00:43:34,680 --> 00:43:36,280
You know, I don't care where
you've been, mate.

933
00:43:36,280 --> 00:43:38,800
It's just a parabolic rise.
It's just, you know, like that's

934
00:43:38,800 --> 00:43:40,320
just one of nature's laws,
right?

935
00:43:41,200 --> 00:43:42,880
So it's not ten years for them,
sorry.

936
00:43:43,000 --> 00:43:45,320
Let's hope it's not. 10 years.
Well, let's let's hope it's not,

937
00:43:45,320 --> 00:43:47,320
but again, you know, you'd
probably get like a dead cat

938
00:43:47,320 --> 00:43:49,920
like if we get a bounce here
like like nickel had a lovely

939
00:43:49,920 --> 00:43:53,000
little bounce after its
parabolic rising up and then off

940
00:43:53,000 --> 00:43:54,480
to where we are.
Think of where nickel is today.

941
00:43:54,480 --> 00:43:57,120
It was trading, I think it was
trading 50,000 U.S. dollars in

942
00:43:57,120 --> 00:44:02,120
2006 or whatever.
It was these these ratios, Sean,

943
00:44:03,280 --> 00:44:05,040
which ones are you paying most
attention to right now?

944
00:44:05,200 --> 00:44:07,760
So.
In the week between Easter and

945
00:44:07,760 --> 00:44:11,640
Anzac Day, I switched my gold
ETF position to a silver ETF

946
00:44:11,640 --> 00:44:14,120
position because it was, it was
over 100 to 1.

947
00:44:14,120 --> 00:44:15,920
You could get 100 ounces of
silver, an ounce of gold.

948
00:44:16,280 --> 00:44:20,320
And we'd seen that during COVID
and I was really annoyed myself

949
00:44:20,320 --> 00:44:22,240
for not doing it.
Then I thought, I'm not watching

950
00:44:22,240 --> 00:44:23,680
this over 100 again and not
doing it.

951
00:44:23,680 --> 00:44:26,080
So I so I converted to to
silver.

952
00:44:26,080 --> 00:44:30,200
So the gold silver ratio, I
think at these levels is, is

953
00:44:30,200 --> 00:44:31,800
very high.
And I think that the average

954
00:44:31,800 --> 00:44:37,160
Indian walks in now to the
silver shop or there's, I just

955
00:44:37,160 --> 00:44:40,920
learned yesterday, there's 14
different silver ETFs in India.

956
00:44:43,000 --> 00:44:45,160
I guess you can have that when
you've got 1.8 billion people or

957
00:44:45,160 --> 00:44:45,800
whatever.
They're right.

958
00:44:45,800 --> 00:44:49,280
But then they love silver.
But you are going to walk into

959
00:44:49,280 --> 00:44:51,680
that shop and you're looking at
the Indian repeat price of gold

960
00:44:51,680 --> 00:44:54,280
and go, well, that's high.
You look across in the Indian,

961
00:44:54,560 --> 00:44:57,280
the silver repeat price is also
at record highs.

962
00:44:57,400 --> 00:45:01,440
But the ratio at 83 to 1 or 85
to 1 or 100 to 1, as it was at

963
00:45:01,440 --> 00:45:07,680
Easter, go granddad or great
granddad tells a story about,

964
00:45:07,680 --> 00:45:10,200
you know, when he converted a 30
or 40.

965
00:45:10,880 --> 00:45:14,640
And so you're thinking I can buy
82 ounces of silver right now.

966
00:45:16,600 --> 00:45:19,000
Central banks have to buy gold
because if they don't have

967
00:45:19,000 --> 00:45:20,840
vaults big enough to store all
the silver, they would need to

968
00:45:20,840 --> 00:45:23,920
do what they need to do.
But I can buy the silver if I

969
00:45:23,920 --> 00:45:26,320
think at some point in the
future that I could use forty of

970
00:45:26,320 --> 00:45:28,760
those oz and buy an ounce of
gold and have 40 oz for free.

971
00:45:28,760 --> 00:45:31,520
Like why would I not do that?
So and that's one of the reasons

972
00:45:31,520 --> 00:45:33,520
the vaults are so empty.
Like they they are buying

973
00:45:33,520 --> 00:45:34,240
silver.
They're doing it.

974
00:45:34,240 --> 00:45:36,440
So I think the gold silver rush
has an interesting one.

975
00:45:36,440 --> 00:45:38,320
It was, but more for a punt.
All right.

976
00:45:38,840 --> 00:45:41,880
To your to your point before
they can adjust with both going

977
00:45:41,880 --> 00:45:43,440
down.
Oh, they can absolutely.

978
00:45:43,440 --> 00:45:46,120
Like the one of the things that
I learned at my peril, you know,

979
00:45:46,120 --> 00:45:49,760
said about losing money when
you're young before we came on

980
00:45:49,760 --> 00:45:54,280
air, like, yeah, the idea that
you would trade one metal based

981
00:45:54,280 --> 00:45:56,600
on a view of the ratio.
It's like, yeah, like the gold,

982
00:45:56,600 --> 00:46:00,240
the Dow gold ratio, oh, I'm Dow
gold ratio is going down.

983
00:46:00,240 --> 00:46:03,520
I'm going to buy gold 2008.
I just fixed that and put a

984
00:46:03,520 --> 00:46:05,320
short on the other, yeah.
That's right.

985
00:46:05,400 --> 00:46:06,960
You've got.
You've got, you've got.

986
00:46:06,960 --> 00:46:09,200
To trade 2 legs or you switch
from one to the other.

987
00:46:09,200 --> 00:46:11,280
So my thing was I sold my gold
to buy silver.

988
00:46:11,280 --> 00:46:14,840
But that's right.
I think the ratio that is for

989
00:46:14,840 --> 00:46:16,760
our clients that we're, we're
sort of jumping up and down at

990
00:46:16,760 --> 00:46:19,640
the moment is gold oil.
And just saying you guys have

991
00:46:19,640 --> 00:46:22,000
got this most unbelievable
operating margin at the moment

992
00:46:22,000 --> 00:46:27,240
in the last mining boom, 8 to 12
barrels of oil for an ounce of

993
00:46:27,240 --> 00:46:31,120
gold, 8 to 12.
We're about 50. 50 plus, yeah,

994
00:46:31,160 --> 00:46:33,240
5050 plus, depending on which
oil price you use or, you know,

995
00:46:33,240 --> 00:46:35,560
whatever.
But yeah, so 8 to 12.

996
00:46:35,560 --> 00:46:38,720
So you look at that and you go,
that's one of the reasons you're

997
00:46:38,720 --> 00:46:39,840
making so much money at the
moment.

998
00:46:39,840 --> 00:46:42,800
Now, how do those alligator
drawers close?

999
00:46:43,120 --> 00:46:45,600
Another interesting ratio.
We don't think of it as a ratio.

1000
00:46:45,600 --> 00:46:49,880
The $8 gold price, yeah, $8 has
been going down for three years.

1001
00:46:49,960 --> 00:46:51,360
Gold has been going up for three
years.

1002
00:46:51,360 --> 00:46:53,880
They have been going in opposite
directions, which is very rare

1003
00:46:53,880 --> 00:46:56,600
in my working life, right?
That's the the and to go on for

1004
00:46:56,600 --> 00:46:59,960
as long as it has.
So yeah, the ratio of like, is

1005
00:46:59,960 --> 00:47:03,000
gold incredibly undervalued
relative to sorry Aussie,

1006
00:47:03,000 --> 00:47:05,120
incredibly undervalued relative
to gold right now.

1007
00:47:05,120 --> 00:47:06,520
Is gold overvalued?
I don't know.

1008
00:47:06,520 --> 00:47:09,200
But again, it's initially ratio,
but if you're a gold producer in

1009
00:47:09,200 --> 00:47:11,320
Australia, you've got the
benefit of high Aussie dollar

1010
00:47:11,320 --> 00:47:13,200
gold price, incredibly low oil
price.

1011
00:47:14,360 --> 00:47:19,200
There's a real risk that eight
years from now you could have an

1012
00:47:19,200 --> 00:47:22,280
$8 gold price totally the same
as it is today with the US

1013
00:47:22,280 --> 00:47:25,520
dollar gold price 70% higher and
oil four times as high.

1014
00:47:25,520 --> 00:47:30,080
It's not going to be as much fun
to be a gold miner in Australia

1015
00:47:30,720 --> 00:47:34,600
10 years from now if those
things happen.

1016
00:47:34,880 --> 00:47:40,040
But in the early 2000s, we saw
oil go from $20 a barrel to $100

1017
00:47:40,040 --> 00:47:43,040
a barrel and, and we saw the
Aussie dollar gold price go

1018
00:47:43,040 --> 00:47:47,040
sideways for five years, while
the US dollar gold price went up

1019
00:47:47,040 --> 00:47:51,480
70%.
So it happened in, in, in the

1020
00:47:51,480 --> 00:47:53,760
history of Noah's rule or just
before Noah's Rule.

1021
00:47:53,760 --> 00:47:55,320
And during our early years it
happened.

1022
00:47:55,320 --> 00:47:58,760
So but what, what was happening
then was we had a, a proper

1023
00:47:58,880 --> 00:48:01,280
commodity bull market.
At the moment we've just got a

1024
00:48:01,280 --> 00:48:05,200
gold bull market and commodities
as a basket going sideways.

1025
00:48:05,760 --> 00:48:09,520
So then the ratio, the biggest
ratio and Goering and Rosen

1026
00:48:09,520 --> 00:48:13,880
sweats, if you follow any of
their stuff, the S&P, you know,

1027
00:48:13,880 --> 00:48:19,160
to the Goldman Sachs commodity
index, which could double here

1028
00:48:19,160 --> 00:48:23,800
and would still be below where
it was in the 1998 lows like

1029
00:48:23,800 --> 00:48:27,000
before that whole last commodity
cycle took off.

1030
00:48:27,000 --> 00:48:29,000
So now this has been like
watching paint dry.

1031
00:48:29,000 --> 00:48:31,960
And I've been talking to this
chart every presentation I've

1032
00:48:31,960 --> 00:48:35,800
given at the like the resources
roundup in Sydney for those last

1033
00:48:35,800 --> 00:48:38,160
five or six years ago tomorrow,
tomorrow.

1034
00:48:38,640 --> 00:48:39,840
And we've had good dialogue
about this.

1035
00:48:39,840 --> 00:48:43,080
Chart before and and, but it's
basing right and and and.

1036
00:48:43,080 --> 00:48:46,600
So let's say that if if bottoms
are an event and it's sorry, if

1037
00:48:46,600 --> 00:48:50,120
bottoms are an event and tops
are a process, let's flip it

1038
00:48:50,120 --> 00:48:51,920
around because that will make it
easier for us.

1039
00:48:52,360 --> 00:48:55,640
The equities are topping out
relative to commodities.

1040
00:48:55,640 --> 00:48:57,800
So we're going through like I
look at the other way, so I look

1041
00:48:57,800 --> 00:49:00,440
at it, that's at the bottom.
But I think if you look at it

1042
00:49:00,440 --> 00:49:03,040
like it's at the top, it's
actually equities that are

1043
00:49:03,040 --> 00:49:04,880
grinding out.
We're going through this process

1044
00:49:04,880 --> 00:49:08,360
of equities being overvalued.
And if I think if you just look

1045
00:49:08,360 --> 00:49:11,080
at the world headlines now and
governments and governments

1046
00:49:11,080 --> 00:49:12,880
allocating money is not
necessarily a good thing, but

1047
00:49:12,880 --> 00:49:15,760
they are, you look at all the
headlines of how much money that

1048
00:49:15,840 --> 00:49:18,440
governments are going to throw
at the mining industry and

1049
00:49:18,440 --> 00:49:20,640
critical minerals, whatever.
At the moment.

1050
00:49:21,360 --> 00:49:24,120
Everyone else is going to kind
of follow that.

1051
00:49:24,120 --> 00:49:27,520
The idea that banks are
overvalued, other companies are

1052
00:49:27,520 --> 00:49:29,160
very moved to the other end of
the spectrum.

1053
00:49:29,160 --> 00:49:32,520
Look at buying commodities.
How do you solve the problems?

1054
00:49:32,720 --> 00:49:35,200
Build new bridges, guns and
butter, you know, build data

1055
00:49:35,200 --> 00:49:37,160
centres, whatever you think
they're going to work or don't

1056
00:49:37,160 --> 00:49:38,680
care.
It's going to create jobs, going

1057
00:49:38,680 --> 00:49:41,680
to demand for steel, you know,
forget about all the energy it's

1058
00:49:41,680 --> 00:49:43,200
going to consume for nothing in
the water.

1059
00:49:43,200 --> 00:49:44,120
You know, that's another
problem.

1060
00:49:44,120 --> 00:49:46,320
But you know, it's kind of like
being a bit cynical.

1061
00:49:46,320 --> 00:49:48,880
But it does feel like all of a
sudden the whole world is coming

1062
00:49:48,880 --> 00:49:51,040
round behind this idea.
We need to do real things again.

1063
00:49:51,040 --> 00:49:52,320
Well.
The government government's

1064
00:49:52,320 --> 00:49:55,360
throwing money at mining
projects or mining companies to

1065
00:49:55,360 --> 00:49:58,680
finance new projects doesn't
create a bull market for

1066
00:49:58,680 --> 00:50:00,000
commodities.
Government's throwing money at

1067
00:50:00,000 --> 00:50:01,400
infrastructure does create a
bull.

1068
00:50:01,400 --> 00:50:03,360
Market No, no, that's right.
And that's why I think like the

1069
00:50:03,400 --> 00:50:06,240
the infrastructure side is a
much is a much better side.

1070
00:50:06,240 --> 00:50:09,320
I mean, I I can't think who said
it recently someone who was

1071
00:50:09,320 --> 00:50:10,880
asked to commentate on this made
a great point.

1072
00:50:10,880 --> 00:50:14,800
They said don't create fixed
prices for things, don't invest

1073
00:50:14,800 --> 00:50:20,000
in mines, create demand for the
product, right.

1074
00:50:20,000 --> 00:50:22,600
Create demand for the product.
That's what governments should

1075
00:50:22,600 --> 00:50:23,160
be doing.
You're right.

1076
00:50:23,160 --> 00:50:25,720
There should be stimulating
demand for the product and let

1077
00:50:25,720 --> 00:50:29,320
the market figure out which I I
I just find it extraordinary

1078
00:50:29,320 --> 00:50:32,400
that the government is putting
money into individual companies.

1079
00:50:32,400 --> 00:50:35,680
I mean, I've said before NAIF
will just become a F draw a line

1080
00:50:35,680 --> 00:50:37,800
under Tasmania.
Everything's fair game before

1081
00:50:37,800 --> 00:50:43,480
this cycle's over.
But but no, so but yeah, it that

1082
00:50:43,480 --> 00:50:45,320
that come back to that ratio
because I think it's a very

1083
00:50:45,320 --> 00:50:49,720
important ratio.
Like in the long run, if you

1084
00:50:49,720 --> 00:50:54,000
look at that chart and the Gary
and Rosen sweat chart, we've

1085
00:50:54,000 --> 00:50:57,520
gone from these long periods of
low to these, the ratio being

1086
00:50:57,520 --> 00:50:59,520
very high.
And at the top of every high you

1087
00:50:59,520 --> 00:51:02,240
can put an event.
You you can put an event.

1088
00:51:02,240 --> 00:51:05,280
There's a there's a the arable
oil embargo, there's something.

1089
00:51:05,280 --> 00:51:09,160
But there's a crisis at the top
of every one of the spikes in

1090
00:51:09,160 --> 00:51:12,400
that ratio between commodities
and and general equities.

1091
00:51:12,400 --> 00:51:15,720
And a bit like, why should you
buy gold if you could own

1092
00:51:15,720 --> 00:51:17,400
companies in your question
before?

1093
00:51:17,400 --> 00:51:23,880
It's because when humans start
to go a little bit off the rails

1094
00:51:23,880 --> 00:51:26,520
and we're not doing what's
necessarily best for all of us

1095
00:51:26,520 --> 00:51:29,520
collectively, but best for us
individually or whatever.

1096
00:51:29,520 --> 00:51:32,600
And you know, you go from
globalization to deglobalization

1097
00:51:32,600 --> 00:51:35,760
or whatever, like, you know,
the, the rivets on some of these

1098
00:51:35,760 --> 00:51:37,520
things, you know, start to pop,
right?

1099
00:51:37,520 --> 00:51:39,480
Everyone figures they've got to
have their own mind for that.

1100
00:51:39,480 --> 00:51:41,280
We can't go to the guy who's got
the best mind.

1101
00:51:41,760 --> 00:51:44,600
And it does sort of feel like
we're getting to that point to

1102
00:51:44,600 --> 00:51:47,520
me, which is a bit sad in some
ways, but it sort of seems

1103
00:51:47,520 --> 00:51:50,960
inevitable.
But it does feel like, yeah,

1104
00:51:50,960 --> 00:51:53,600
nothing without mining.
Nothing happens in the world

1105
00:51:53,600 --> 00:51:55,320
without mining.
And mining's been unloved now

1106
00:51:55,320 --> 00:51:59,520
for how many years?
You know, over a decade, really,

1107
00:51:59,520 --> 00:52:02,160
that there's been a fascination
with broader equities.

1108
00:52:02,160 --> 00:52:04,680
And, you know, mining's been
sort of unloved and pushed to

1109
00:52:04,680 --> 00:52:07,920
one side and made harder and
harder and nobody wants to work

1110
00:52:07,920 --> 00:52:10,600
in it and kids don't want to
study to be involved in it.

1111
00:52:10,600 --> 00:52:12,520
Like, you know, there's a,
there's a lot of work to be done

1112
00:52:12,520 --> 00:52:14,120
to get it back to some normal
thing.

1113
00:52:14,120 --> 00:52:16,600
I would.
Have thought part of that comes

1114
00:52:16,600 --> 00:52:19,080
from what you said earlier about
being attracted to what goes up

1115
00:52:19,080 --> 00:52:21,240
as well.
And tech has gone up and crypto

1116
00:52:21,240 --> 00:52:23,000
has gone up and all these sorts
of things have gone up.

1117
00:52:23,000 --> 00:52:25,800
And now we've seen gold is going
up, gone up and people are

1118
00:52:25,800 --> 00:52:28,480
interested.
And perhaps if and when we get

1119
00:52:28,480 --> 00:52:31,640
to that point where mining
stocks in general go up, maybe

1120
00:52:31,640 --> 00:52:33,440
we start to see more love and
more interest in it.

1121
00:52:33,680 --> 00:52:35,800
Yeah, but I think you have to
see, unfortunately, I think, I

1122
00:52:35,800 --> 00:52:37,520
think you actually have to see
the other things go down.

1123
00:52:37,680 --> 00:52:40,280
I, I think you're right that
that's the like in the, in the

1124
00:52:40,280 --> 00:52:46,760
late 1990s, like I was a huge
gold ball, late 1990s gold

1125
00:52:46,760 --> 00:52:49,760
producers are up the wazoo
hedging like a whole, you know,

1126
00:52:49,760 --> 00:52:52,120
like 100 million short.
And I was saying at some point,

1127
00:52:52,320 --> 00:52:54,360
like the central banks, I, my
thought is the central banks are

1128
00:52:54,360 --> 00:52:56,440
going to figure out they're
responsible for the gold price

1129
00:52:56,440 --> 00:52:58,280
going down.
Didn't figure out that time.

1130
00:52:58,280 --> 00:52:59,960
They're actually quite happy for
it to be low.

1131
00:53:00,240 --> 00:53:02,160
But not only were central banks
selling, but they were lending

1132
00:53:02,160 --> 00:53:03,880
it to all these guys to go short
it.

1133
00:53:04,440 --> 00:53:07,400
And I go, if the gold market
starts to take off because the

1134
00:53:07,400 --> 00:53:09,480
central banks woke up and
stopped lending, you know,

1135
00:53:09,480 --> 00:53:12,400
essentially called in, they were
funding the short, if you like.

1136
00:53:12,840 --> 00:53:14,160
And I thought that might be the
kick of it.

1137
00:53:14,160 --> 00:53:17,200
I didn't believe in my wildest
dreams that gold mining

1138
00:53:17,200 --> 00:53:20,200
companies would be raising
equity to close out their hedge

1139
00:53:20,200 --> 00:53:21,520
books.
I think I said, you go, I

1140
00:53:21,520 --> 00:53:23,200
wouldn't be here today if I'd
figured that out.

1141
00:53:23,200 --> 00:53:26,280
I would South of France and my
feet and buckets of champagne

1142
00:53:26,280 --> 00:53:29,600
like you had told me that all of
like Newcrest was going to do a

1143
00:53:29,600 --> 00:53:33,320
$2 billion equity raise to
crystallize their hedge.

1144
00:53:33,320 --> 00:53:36,480
Six years later, the gold price
had already gone up whatever.

1145
00:53:36,480 --> 00:53:38,960
But but that was the reality of
what needed to happen because of

1146
00:53:38,960 --> 00:53:42,400
all the bad stuff that had been
done by those companies, you

1147
00:53:42,400 --> 00:53:48,160
know, lower down right.
And so, but that it took really

1148
00:53:48,600 --> 00:53:52,800
the.com bust for people to come
back and be interested in gold

1149
00:53:52,800 --> 00:53:54,720
mining companies and to drive
their share prices up and to

1150
00:53:54,720 --> 00:53:58,400
allow them to do all that stuff.
Like it actually took people to

1151
00:53:58,680 --> 00:54:01,040
everything else to be on the
nose to come back to mining.

1152
00:54:01,040 --> 00:54:04,840
We actually needed the.com bust
to create the mining boom.

1153
00:54:04,840 --> 00:54:07,720
And it still feels to me like
that's the the problem now.

1154
00:54:07,720 --> 00:54:09,080
Like I was bullish gold back
then.

1155
00:54:09,080 --> 00:54:10,400
People say, when do you think
it's going to happen?

1156
00:54:10,400 --> 00:54:12,000
I said, well, when blood, sweat
and tears goes back into

1157
00:54:12,000 --> 00:54:14,680
fashion, when people actually
realize you have to work for a

1158
00:54:14,680 --> 00:54:18,680
living.
And I think post COVID, I've

1159
00:54:18,680 --> 00:54:22,040
called the revenge of Hyviz.
Like I think slowly this has

1160
00:54:22,040 --> 00:54:24,640
been building post COVID where
people who have to turn up to

1161
00:54:24,640 --> 00:54:29,240
work, have to physically go to a
job, are starting to figure out

1162
00:54:29,240 --> 00:54:30,960
that they're worth more than
people.

1163
00:54:30,960 --> 00:54:33,440
You know, you can be, you know,
Betty and Byron Bay, you can

1164
00:54:33,440 --> 00:54:35,160
just as easily be Barry and
Bangalore, right?

1165
00:54:35,160 --> 00:54:37,280
Like you're competing with a
totally different group of

1166
00:54:37,280 --> 00:54:39,520
people.
But you know, like we realize we

1167
00:54:39,520 --> 00:54:44,520
have to get back into doing real
stuff and slowly but surely

1168
00:54:44,520 --> 00:54:47,640
we're coming back to to mining,
back to raw materials, I think,

1169
00:54:47,960 --> 00:54:50,880
but it's only slow at the moment
because it's going up.

1170
00:54:50,880 --> 00:54:52,920
But relative to other things,
it's just going sideways.

1171
00:54:52,920 --> 00:54:55,400
But at least we're now flat with
it like on that ratio.

1172
00:54:55,880 --> 00:54:58,440
But to outperform the other
things I think have to go down.

1173
00:54:59,200 --> 00:55:01,080
I think you actually have to see
CBA falling.

1174
00:55:01,080 --> 00:55:03,960
You have to see those other
shares fall enough that people

1175
00:55:04,080 --> 00:55:08,600
like let go of those things and
and decide to go down to the

1176
00:55:08,600 --> 00:55:10,640
other end of the of the thing,
right?

1177
00:55:10,640 --> 00:55:13,480
Like BHP versus CBA, that's a
ratio.

1178
00:55:13,480 --> 00:55:16,360
You know, it's got like 5, it's
gone from 5:00 to 1:00 to 1:00

1179
00:55:16,360 --> 00:55:17,840
to 1:00 to 5:00 to 1:00 to 1:00
to 1:00.

1180
00:55:18,160 --> 00:55:20,960
And you can chat cycle almost
perfectly.

1181
00:55:21,160 --> 00:55:23,800
Some of those, some of those
mega cap, you know, darlings

1182
00:55:23,800 --> 00:55:28,680
like look at CSL down 40 odd
percent wise tech like yeah,

1183
00:55:29,000 --> 00:55:31,760
down substantially.
Some of those those massive

1184
00:55:31,760 --> 00:55:35,360
beneficiaries of of index flows
over time, they're starting to

1185
00:55:35,760 --> 00:55:36,800
peel off.
They're very much

1186
00:55:36,800 --> 00:55:40,360
underperforming small, small
caps in some respects and

1187
00:55:40,360 --> 00:55:42,560
certainly on the point.
I mean gold and gold equities.

1188
00:55:42,640 --> 00:55:44,240
Is it?
Is it already happening?

1189
00:55:44,720 --> 00:55:46,200
I I think it's absolutely
already happening.

1190
00:55:46,200 --> 00:55:48,360
And you're right, like the
passive flows, like if you're

1191
00:55:48,360 --> 00:55:51,240
everyone wants to get in an
index, like all the things that

1192
00:55:51,240 --> 00:55:54,320
companies do just to get in an
index, right, is, is kind of

1193
00:55:54,320 --> 00:55:56,040
crazy.
I merge with some, you know,

1194
00:55:56,080 --> 00:55:58,240
like put two ugly companies
together to make it a bigger

1195
00:55:58,240 --> 00:56:00,560
ugly company.
But now you get in the index and

1196
00:56:00,560 --> 00:56:03,080
then you get that attraction for
a while, but in the long run,

1197
00:56:03,080 --> 00:56:05,560
the market smells you.
Yeah, so, so like, yeah.

1198
00:56:05,560 --> 00:56:07,800
And if you underperform enough,
you get dropped out of the

1199
00:56:07,800 --> 00:56:10,360
index, right.
So the volatility inside the

1200
00:56:10,360 --> 00:56:12,600
indices is huge relative to the
indices.

1201
00:56:12,600 --> 00:56:16,920
Again, a Barry Ritholtz podcast
that listen to Lizanne Saunders,

1202
00:56:17,280 --> 00:56:19,560
she was talking about the
volatility of individual stocks

1203
00:56:20,000 --> 00:56:22,320
is really quite high at the
moment, but the volatility of

1204
00:56:22,320 --> 00:56:25,360
the index is really so, so the
passive flows are driving the

1205
00:56:25,360 --> 00:56:28,320
whole thing in One Direction,
but there is this big movement

1206
00:56:28,320 --> 00:56:30,560
as the these other companies
sort of resolve.

1207
00:56:30,880 --> 00:56:35,240
But yeah, CSL, to your point,
those, those companies, like

1208
00:56:35,240 --> 00:56:37,880
it's only a little while ago.
I, I, I think that when people

1209
00:56:37,880 --> 00:56:41,200
were agonizing about how CBA
was, you know, and it got to

1210
00:56:41,200 --> 00:56:44,840
5:00 to 1:00 at BHP, like that
might mark the low of all the

1211
00:56:44,840 --> 00:56:46,680
beginning of the, of the next
move right there.

1212
00:56:46,680 --> 00:56:49,440
You finally get to the point
where people go, I'm willing to

1213
00:56:49,440 --> 00:56:51,520
let go to buy something else.
Something else is either cheap

1214
00:56:51,520 --> 00:56:54,560
enough to do it or I'm worried
about that, that just can't get

1215
00:56:54,560 --> 00:56:56,720
any better, regardless of the
passive flows, because people

1216
00:56:56,720 --> 00:56:58,840
look through that and go, well,
how do they, how do they going

1217
00:56:58,840 --> 00:57:01,280
to pay me a decent dividend?
You know, you drive the share

1218
00:57:01,280 --> 00:57:04,480
price up enough.
It does feel a bit a bit like

1219
00:57:04,600 --> 00:57:07,280
that.
So but I do believe that like to

1220
00:57:07,280 --> 00:57:10,320
really have the the rocket boost
to have the the generalist come

1221
00:57:10,320 --> 00:57:13,120
in or whatever, they're going to
have to be repulsed by, they

1222
00:57:13,120 --> 00:57:15,320
have to sort of be repelled from
the other side of the equation.

1223
00:57:15,320 --> 00:57:17,920
They have to, you know, leave
that side of the boat and come,

1224
00:57:18,080 --> 00:57:21,080
come to the other side of the
boat in some some way.

1225
00:57:24,080 --> 00:57:28,000
And then the other, the other
kind of ratios that you've

1226
00:57:28,000 --> 00:57:32,880
spoken about, you look at gold,
gold price relative to a 200

1227
00:57:32,880 --> 00:57:39,000
week, yeah, moving average.
And when it when it's 70% kind

1228
00:57:39,000 --> 00:57:42,720
of north of that has been a
pretty significant moment where

1229
00:57:42,720 --> 00:57:45,680
when maybe maybe it peels back
and comes back to to norm.

1230
00:57:46,080 --> 00:57:49,280
We've we've we've just hit one
of those a few weeks ago.

1231
00:57:49,280 --> 00:57:52,600
Yeah.
You referenced those periods in

1232
00:57:52,600 --> 00:57:56,600
the past, 2006, 2008, 2011,
yeah, also hit those moments and

1233
00:57:56,600 --> 00:57:59,960
they were great times to to, to
potentially think about, yeah,

1234
00:58:00,360 --> 00:58:02,960
the gold price for tracing.
But what, what you didn't

1235
00:58:02,960 --> 00:58:06,080
reference was the period in the
in the 70s and 80s.

1236
00:58:06,080 --> 00:58:11,000
When, when when When the
parabolic trend kept extending.

1237
00:58:11,000 --> 00:58:12,240
Yeah, Yeah.
No, absolutely.

1238
00:58:12,240 --> 00:58:16,360
So to the extent that we're in
one of those periods at the

1239
00:58:16,360 --> 00:58:18,840
moment, like and we raised this
with clients a couple of weeks

1240
00:58:18,840 --> 00:58:21,520
ago, we're more than 70% above
the 200 week moving average and

1241
00:58:21,520 --> 00:58:23,200
we're more than 20% above the
200 day.

1242
00:58:24,960 --> 00:58:28,080
Those are really rare in the
last 40 years.

1243
00:58:28,080 --> 00:58:33,960
So 2006, 2008, 2011, that's it.
Only once in Aussie dollar,

1244
00:58:33,960 --> 00:58:38,360
2009, Aussie dollar gold only in
2009, the depths of the GFC when

1245
00:58:38,360 --> 00:58:41,400
the Aussie fell collapsed and
Aussie dollar gold got up to

1246
00:58:41,400 --> 00:58:45,200
1700 ish, which didn't beat
again for about 10 years.

1247
00:58:46,600 --> 00:58:50,000
Yeah, the 1970s we had these
extended periods.

1248
00:58:50,000 --> 00:58:54,160
So to the extent that we can
sustain in one of these elevated

1249
00:58:55,160 --> 00:58:58,160
regions, I'm not willing to fade
gold.

1250
00:58:58,160 --> 00:59:01,040
Like I look at it and go, it
looks a bit like 2006, it looks

1251
00:59:01,040 --> 00:59:04,560
a bit like 2008, looks a bit
like 2011, but they all ended.

1252
00:59:04,800 --> 00:59:07,560
And after it ended, you had
plenty of time to react,

1253
00:59:07,560 --> 00:59:12,360
particularly after 2011.
All right, So I'm not saying

1254
00:59:12,360 --> 00:59:15,640
that you sell because it's in
that zone.

1255
00:59:15,640 --> 00:59:18,240
While it's in that zone, you
should show it enormous respect.

1256
00:59:18,240 --> 00:59:21,200
But when those zones have ended
in the past, we, you know, like

1257
00:59:21,880 --> 00:59:24,760
it kind of it's a bit like a
plane that's gone stalled, you

1258
00:59:24,760 --> 00:59:27,960
know, gravity then applies.
So we're watching it like a

1259
00:59:27,960 --> 00:59:30,600
hawk.
Because if it if it does end,

1260
00:59:30,640 --> 00:59:33,960
you go, OK, whatever was the
motive force that was driving

1261
00:59:33,960 --> 00:59:37,080
the market, that motive force
has ended.

1262
00:59:37,320 --> 00:59:39,400
Like that level of intensity has
gone.

1263
00:59:39,400 --> 00:59:42,200
Why is it gone?
Maybe they went somewhere else.

1264
00:59:43,320 --> 00:59:45,360
Yeah, maybe the Chinese have
decided that they're going to

1265
00:59:45,360 --> 00:59:47,520
buy their own equity market now
and they're not going to buy

1266
00:59:47,520 --> 00:59:48,960
gold.
Heaven help us, they decide to

1267
00:59:48,960 --> 00:59:50,760
sell gold to buy their equity
market.

1268
00:59:50,800 --> 00:59:53,120
That's.
But just stopping buying and

1269
00:59:53,120 --> 00:59:57,320
buying equities instead could be
enough to to slow the rate.

1270
00:59:57,520 --> 00:59:59,800
And I think we all agree, like
the rate of climb of the gold

1271
00:59:59,800 --> 01:00:04,480
market was not, you know, $1000
in $1500 in three months in the

1272
01:00:04,480 --> 01:00:06,800
middle of last month.
It's kind of a little bit

1273
01:00:06,800 --> 01:00:09,000
unsustainable, probably.
Pretty quick, yeah.

1274
01:00:09,440 --> 01:00:11,160
Yeah.
So, so that you know that rate

1275
01:00:11,160 --> 01:00:12,840
of change.
And so this is where like, you

1276
01:00:12,840 --> 01:00:15,360
know, like I don't think anybody
who's a gold producer should be

1277
01:00:15,360 --> 01:00:16,920
doing crazy amounts of hedging
now.

1278
01:00:16,920 --> 01:00:20,520
But if you're if you're if
you're borrowing money to buy a

1279
01:00:20,520 --> 01:00:24,560
mine to build a mine right now,
you can do fantastic hedging to

1280
01:00:24,560 --> 01:00:27,480
do that and avoid dilution at,
you know, clearly nobody's

1281
01:00:27,480 --> 01:00:30,040
prices, share prices ever
reflecting fair value around the

1282
01:00:30,040 --> 01:00:32,360
time they go to do financing.
So you should be thinking about

1283
01:00:32,360 --> 01:00:34,400
that, right?
And you think about how you do

1284
01:00:34,400 --> 01:00:36,800
that, you borrow more money and
buy puts or you do whatever.

1285
01:00:37,200 --> 01:00:40,480
But at this type of stretch, why
would you not?

1286
01:00:40,480 --> 01:00:43,200
I mean, we've had massive
amounts of raisings by the

1287
01:00:43,600 --> 01:00:46,240
industry in recent times.
Why gold mining companies been

1288
01:00:46,240 --> 01:00:48,280
raising equity?
Because the brokers all tell

1289
01:00:48,280 --> 01:00:49,960
them you've got to feed the
ducks while they're cracking.

1290
01:00:50,240 --> 01:00:52,840
There's demand.
So you've got to issue because

1291
01:00:52,840 --> 01:00:54,520
the demand can stop just like
that.

1292
01:00:54,520 --> 01:00:57,520
Like we all know like junior
stocks are running hot and you

1293
01:00:57,520 --> 01:01:01,000
could sell as much as you want.
And then you wait two days too

1294
01:01:01,000 --> 01:01:03,960
long and you bring up the broker
and they go, you know, 5 offered

1295
01:01:03,960 --> 01:01:06,280
no bid, right?
And, and you just parabolic

1296
01:01:06,280 --> 01:01:08,960
rise, same thing.
Well, people know that, that

1297
01:01:08,960 --> 01:01:11,000
they raise equity.
So why not sell gold in the same

1298
01:01:11,000 --> 01:01:13,440
way when the market's really
intense, why not sell a little

1299
01:01:13,440 --> 01:01:16,400
bit more than you produce to put
it all the way for a rainy day?

1300
01:01:16,400 --> 01:01:18,800
That's what that's what hedging
used to be like.

1301
01:01:18,800 --> 01:01:21,360
That's sensible hedging.
But in a, in a bull market, and

1302
01:01:21,360 --> 01:01:24,840
it is a bull market, you only do
that enough to kind of get you

1303
01:01:24,840 --> 01:01:26,840
through the next three months or
six months or whatever.

1304
01:01:26,840 --> 01:01:30,520
You're not going out doing stuff
or crazy stuff, But why not be

1305
01:01:30,520 --> 01:01:33,040
managing, you know, cash flows?
I mean, a couple of weeks ago

1306
01:01:33,040 --> 01:01:36,000
you could have sold, you know,
four, $500 higher than we didn't

1307
01:01:36,000 --> 01:01:39,440
know it's going to come back.
But the margins are so great for

1308
01:01:39,440 --> 01:01:41,080
these producers.
Why not do a little bit?

1309
01:01:41,840 --> 01:01:43,720
But at the moment, they're all
running scared of the equity

1310
01:01:43,760 --> 01:01:46,160
market and those algorithms.
I love sort of reflecting on all

1311
01:01:46,160 --> 01:01:48,120
the history with you, so I
appreciate you coming on the

1312
01:01:48,120 --> 01:01:49,680
show again and and talking us
through.

1313
01:01:49,720 --> 01:01:51,800
I'm sure the audience will get
plenty out of this, but

1314
01:01:51,800 --> 01:01:53,480
appreciate it.
Well, I felt like a bit of a

1315
01:01:53,480 --> 01:01:55,160
ramble from my perspective, but
I hope it was.

1316
01:01:55,200 --> 01:01:57,160
I hope it's useful for others.
So always educational.

1317
01:01:57,480 --> 01:01:59,600
Cool.
Thank you so much, Sean.

1318
01:01:59,960 --> 01:02:02,440
Better thank our partners mate.
We better thank our partners

1319
01:02:02,440 --> 01:02:03,920
mate.
Firstly on the T-shirt there

1320
01:02:03,920 --> 01:02:07,480
Sandvik ground support.
Secondly, check out Focus the

1321
01:02:07,480 --> 01:02:10,600
platform by Market Tech.
Interlinks get around it too.

1322
01:02:10,800 --> 01:02:14,520
Hoodoo hoodoo.
Now remember, I'm an idiot.

1323
01:02:14,840 --> 01:02:17,280
JD's an idiot.
If you thought any of this was

1324
01:02:17,280 --> 01:02:19,800
anything other than
entertainment, you're an idiot

1325
01:02:20,160 --> 01:02:21,360
and you need to read out a
disclaimer.